Marketing control rights and their distribution within technology licensing agreements: a real options perspective

Technology licensing continues to gain popularity as firms seek new sources of revenue from their product development activities. A key decision for the licensor involves whether to distribute marketing control rights associated with licensed technology on a more or less restrictive basis. Drawing on the real options literature, this paper argues that factors related to the top management mindset of the licensor and the marketing capabilities of the licensee impact the licensor’s distribution decision. A logit analysis of 129 technology licensing agreements within the pharmaceutical industry provides strong support for the hypothesized variables and broadens researchers’ understanding of an important marketing decision related to innovation management and the design of inter-firm relationships.