What's Your Stake When Engaging in Licensing? A Comparison Between Standard and Partnership-Embedded Licensing Strategies

When engaging in licensing, companies may either use standard agreements or may embed the licensing deals into broader partnerships. Whether these alternative schemes are more frequently associated with particular types of licensors and licensees and whether they imply different outcomes for the two parties is still underinvestigated in the relevant literature. Inspired by this, our exploratory study, enriched by 341 observations of licensing contracts signed between 1990 and 2010, addresses these research gaps. Aiming at this, this article offers a full-fledged analysis, encompassing an in-depth overview of the overall licensing deals, a detailed description of the licensing parties' profiles, and a t-test comparison of licensing parties' traits both at the time of the licensing deal and after the deal, in the two different regimes. Further, it presents a complementary econometric exercise for assessing the impact of the two alternatives for both the licensor and the licensee. The study shows that, in general, licensors are more inventive and less specialized than licensees, and that licensors and licensees engaging in standard licensing have a higher knowledge overlap than firms engaging in partnership embedded licensing. The difference is also remarkable in terms of the outcomes of the different license agreements measured through patenting activity: the licensor is more likely to guide the invention process in standard licensing contexts, while the licensee is more likely to guide it in the opposite scenario.