Choosing between international technology licensing partners: An empirical analysis of U.S. biotechnology firms

This paper examines the potential factors that might influence U.S. biotechnology holders’ licensing decisions regarding whom to choose as foreign licensing partners in the context of a global environment. The important explanatory factors relate to the knowledge appropriability regime of the licensee country (i.e. strength of IPR protection), familiarity through prior interaction, business similarity between partners, and prior independent experience as a licensor. U.S. biotechnology firms also license technology more to partners who have joint manufacturing, marketing, and research and development (R&D) experience. The results show that transaction cost considerations weigh heavily when choosing international licensing partners.