Exclusivity in licensing alliances: Using hostages to support technology commercialization

Deepak Somaya, Young Jun Kim, Nicholas S. Vonortas

Research output: Contribution to journalArticle

37 Citations (Scopus)

Abstract

We examine why exclusivity provisions are used in licensing alliances, and when restrictions in licensing scope (e.g., by product or geography) accompany these exclusivity provisions. We find broad support for the proposition that these features are associated with the contractual challenges of allying with licensees when they contribute valuable complementary capabilities toward the commercialization of licensed technologies. Evidence from our data suggests that exclusivity is used as a contractual hostage to safeguard licensee investments in complementary assets and to enable contracting over early stage technologies. Scope restrictions are employed to balance the tradeoffs between the value creation made possible by licensee complementary capabilities and the transactional hazards entailed in working exclusively with licensees. Our results also suggest that scope restrictions and other formal safeguards may be substitute mechanisms for managing similar transactional concerns in licensing alliances.

Original languageEnglish
Pages (from-to)159-186
Number of pages28
JournalStrategic Management Journal
Volume32
Issue number2
DOIs
Publication statusPublished - 2011 Feb 1
Externally publishedYes

Fingerprint

Licensing
Alliances
Technology commercialization
Exclusivity
Hostage
Safeguards
Commercialization of technology
Substitute
Value creation
Hazard
Trade-offs
Complementary assets
Contracting
Geography

Keywords

  • alliances
  • complementary assets
  • contractual hazards
  • hostages
  • licensing

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

Cite this

Exclusivity in licensing alliances : Using hostages to support technology commercialization. / Somaya, Deepak; Kim, Young Jun; Vonortas, Nicholas S.

In: Strategic Management Journal, Vol. 32, No. 2, 01.02.2011, p. 159-186.

Research output: Contribution to journalArticle

Somaya, Deepak ; Kim, Young Jun ; Vonortas, Nicholas S. / Exclusivity in licensing alliances : Using hostages to support technology commercialization. In: Strategic Management Journal. 2011 ; Vol. 32, No. 2. pp. 159-186.
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