Can patents out-licensing improve firms′ innovation performances?

Can patents out-licensing improve firms′ innovation performances?

Feng Ping

Science Research Management ›› 2021, Vol. 42 ›› Issue (8) : 184-191.

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PDF(327 KB)

Science Research Management ›› 2021, Vol. 42 ›› Issue (8) : 184-191.

Can patents out-licensing improve firms′ innovation performances?

Feng Ping

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Abstract

Patent licensing transactions have a significant impact on the development of firms′ innovation activities. From the perspective of the licensee, the technology-licensing transaction can help production firms to lower the technical threshold, directly enter the production or assembly of the industry. It can also help R&D firms to reduce innovation costs and risks, keep up with the technological frontiers in the professional field and accelerate technology learning. From the perspective of the licensor, enterprises can obtain corresponding income by renting proprietary technology, internalizing the external part of the innovation behavior. Licensors can also develop their licensing management capabilities and knowledge digestion and absorption capabilities through licensing transactions.
Based on the role of technology catch-up, the existing empirical research on patent licensing transactions of Chinese enterprises focuses on the impact of patent licensing-in behaviors on the innovation ability of firms. Paper to explore the impact of licensing-out behavior on firms′ innovation ability is rare. Existing related researches mainly focus on developed countries, and most of them neglect the impact of the companies′ innovation capabilities on their patent licensing decisions. The more companies holding patents, the stronger their innovation ability, and the greater the possibility of licensing their patents. Enterprise patent licensing behavior has an obvious self-selection effect, which means that there is a strong endogenous relationship between enterprise patent out-licensing and its innovation capability. Ignoring this potential endogeneity may overestimate the true effect of patent licensing.
By applying the Propensity Score Matching difference-in-difference method on the patent out-licensing data of Chinese manufacturing listed companies in 2008-2017, this paper examines the two-way causal relationship between the patent out-licensing behavior of Chinese firms and the development of their innovation ability and makes the following findings. (1) The self-selection effect of the licensing-out behavior of listed companies in China′s manufacturing industry is significant. Firms with higher innovation ability are more likely to license out their patents. The existence of the self-selection effect indicates that the endogenous problem between patent out-licensing and innovation capability cannot be ignored, and neglecting the endogeneity will overestimate the true role of patent out-licensing behavior. (2) After controlling for the self-selection effect, firms′ patent licensing-out behavior has a significant long-term improvement effect on their innovation capability. Firms′ patent licensing-out behavior can strengthen the awareness of intellectual property protection and develop their patent licensing management capabilities, which helps enterprises to enhance their innovative capabilities and maintain their long-term leading edge in technology. (3) Further research on different technology types of enterprises finds that the effects of patents out-licensing vary with technological regimes. Patent out-licensing behavior can improve the innovative performance of high-tech and low-tech industry enterprises in the long term and short term respectively. But for the middle-tech industry enterprises, the effects are insignificant.
The findings of the study give us the following enlightenment: First, as an effective way to improve the learning ability of technology, the patent technology licensing among enterprises not only helps the licensee enterprises to achieve innovation through the technology licensing-in but also helps the licensor enterprises to enhance their independent innovation ability and maintain long-term technology leading edge. Therefore, according to their own development needs, enterprises can out-license their own patented technologies to other enterprises to maintain their long-term leading edge in technology. Technology-related enterprises can eliminate patent licensing barriers by building patent pools, reduce patent licensing transaction costs, promote the application of patented technologies, and achieve win-win cooperation. Second, information dissemination activities are conducive to the improvement of enterprise innovation capabilities. When the Chinese government gives policy guidance to encourage enterprises′ technological innovation and R&D activities, it also needs to pay sufficient attention to the middle and back ends of R&D activities. The government should actively plan and introduce policies conducive to the development of the patent technology market, build an information exchange platform for potential technology transaction parties, reduce information asymmetry, encourage the development of third-party technology transaction services, actively guide the construction of patent pools, and accelerate proprietary technology transactions. The government can learn from the "patent box" system of developed countries in Europe and America, give appropriate tax incentives to the transfer of patent technology licenses, encourage more Chinese companies to voluntarily spread their proprietary information and achieve a win-win situation for both parties.

Key words

patent out-licensing / innovation performance / propensity score matching / difference-in-difference

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Feng Ping. Can patents out-licensing improve firms′ innovation performances?[J]. Science Research Management. 2021, 42(8): 184-191

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