Prerequisites for Successful Technology Commercialization
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Prerequisites for Successful Technology Commercialization through Licensing An Empirical Study of Five Technology Licensing Pioneers Master of Science Thesis in the Master Degree Program, Entrepreneurship and Business Design JOHANNA JUHL Department of Technology Management and Economics Division of Management of Organizational Renewal and Entrepreneurship – MORE CHALMERS UNIVERSITY OF TECHNOLOGY Gothenburg, Sweden, 2014 Report No. E2014:093 PREREQUISITES FOR SUCCESSFUL TECHNOLOGY COMMERCIALIZATION THROUGH LICENSING An Empirical Study of Five Technology Licensing Pioneers Master of Science Thesis in the Master Degree Program, Entrepreneurship and Business Design JOHANNA JUHL Department of Technology Management and Economics Division of Management of Organizational Renewal and Entrepreneurship – MORE CHALMERS UNIVERSITY OF TECHNOLOGY Gothenburg, Sweden 2014 PREREQUISITES FOR SUCCESSFUL TECHNOLOGY COMMERCIALIZATION THROUGH LICENSING An Empirical Study of Five Technology Licensing Pioneers JOHANNA JUHL © Johanna Juhl, 2014. Report No. E2014:093 Examiner: Ulf Petrusson Supervisor: Bowman Heiden Date of Presentation: 2014-08-29 Master Thesis 2014 Master degree program Entrepreneurship and Business Design Department of Technology Management and Economics Chalmers University of Technology SE-412 96 Gothenburg Sweden Telephone + 46 (0)31-772 1000 Chalmers Reproservice Gothenburg, Sweden, 2014 Prerequisites for Successful Technology Commercialization through Licensing An Empirical Study of Five Technology Licensing Pioneers JOHANNA JUHL Department of Technology Management and Economics Chalmers University of Technology ABSTRACT Market transactions for technologies and knowledge have become more common in today’s intellectualized economy. These markets have changed the traditional mindset of that organizations need to own downstream manufacturing assets in order to commercialize their assets. Manufacturing organizations to a larger extent commercialize technologies through licensing as a mean to optimize the return on their research investment, and certain organizations use licensing as a sole mean to obtain revenue. Licensing is an example of the innovative division of labor that has lead to organizations that offer R&D as a stand-alone value proposition. Organizations such as Texas Instruments, IBM, and Dow Chemicals pioneered the licensing trend and have collected hundreds of millions of dollars in annual licensing revenues. The success of these companies have inspired others to follow, however authors such as Ulrich Lichtenthaler have indicated that many organizations have found it hard to replicate the success of these companies. Ulrich Lichtenthaler, Russel Parr, and Patrick Sullivan, amongst others, have investigated the area and provided readers with factors and models for optimizing licensing return. However, prior studies have focused on pure organizational structures or directed their studies to organizations that are thinking about including licensing in their business model, compared to organizations already active in the field. This thesis is the result of an empirical study of five licensing organizations that are proclaimed pioneers in the technology licensing space: IBM, Rambus, PARC, WARF and MIT TLO. The study was set out to investigate what organizations that perform well in the technology licensing field have in common and consisted of a set of interviews with individuals in managerial positions at the organizations. The found factors were in many cases interdependent, and often the found factors could not be accomplished easily but required time and persistency. The factors could be broken down into four major factors that enabled the others: sufficient resources, credibility, organizational culture, and lastly and most importantly, the successful organizations had individual licensing strategies tailored to their specific assets, mission, objectives and challenges. An example of this was how the organizations that had more fundamental research results used the start up community to incubate technologies and bridge the gap between them and the commercial market. The findings supported theories provided by Petrusson (2004), Arora, Fosfuri and Gambardella (2001), and Megantz (2002), yet expanding the theories by deconstructing the reasoning behind the success factors as well as providing intelligence on how organizations may adopt and execute against them. Keywords: intellectual property, commercialization, research, development, licensing, strategy, management I ACKNOWLEDGEMENTS This thesis is the result of an internship that was performed at PARC, Palo Alto, during the spring of 2014. I am happy and appreciative of the opportunity to work within an organization that work on the forefront of Intellectual Capital Management. PARC provided me with the opportunity to work in a setting where I could discuss and test ideas. There are many people I wish to thank for helping me make this thesis possible. Firstly, I would like to express my gratitude to the employees at PARC and specifically the Intellectual Capital Management group, especially Michael Waltrip, Divyata Griggs and Bart McDermott. They tirelessly answered questions and gave feedback on my work. Secondly, I would like to thank IBM, Rambus, WARF and the MIT TLO especially Jim Schreiber, Stefan Tamme, Leigh Cagan, and Lita Nelsen for allowing me to interview them in order to get an understanding of their licensing strategy. Thirdly, I would like to thank Karen Hersey and Rodger D. Jackson for allowing me to interview them and helping me set up other interviews. Fourthly, I would like to thank my supervisors Bowman Heiden and Damon Matteo who helped guide my work, encouraged and challenged me, and allowed me to leverage their networks. Last but not least, I would like to thank family and friends for help, thoughts, love, and support throughout the thesis work. Johanna Juhl II TABLE OF CONTENTS 1 Introduction ......................................................................................................................... 9 1.1 Background .................................................................................................................................. 9 1.2 Prior Research ........................................................................................................................... 11 1.3 Purpose of the Study .................................................................................................................. 12 1.4 Research Questions ................................................................................................................... 13 1.4.1 Main Question .......................................................................................................................................... 13 1.4.2 Sub-Questions .......................................................................................................................................... 13 1.5 Scope and Limitations ............................................................................................................... 14 1.6 The Disposition of the Study ..................................................................................................... 14 2 Methodology ...................................................................................................................... 15 2.1 Research Strategy ...................................................................................................................... 15 2.2 Research Design ........................................................................................................................ 15 2.3 Research Process ....................................................................................................................... 15 2.3.1 Literature Study ........................................................................................................................................ 15 2.3.2 Formulation of Research Questions ..................................................................................................... 16 2.3.3 Empirical Selection of Interviewees ...................................................................................................... 16 2.3.3.1 Product-Based Organization ............................................................................................................................ 16 2.3.3.2 Hybrid Organization .......................................................................................................................................... 16 2.3.3.3 Licensing Organization ..................................................................................................................................... 16 2.3.4 Formulation of Interview Questions .................................................................................................... 17 2.3.5 Data Collection ......................................................................................................................................... 17 2.3.6 Interpretation of Data ............................................................................................................................. 17 2.3.7 Analysis of Data and Conclusion of Thesis ......................................................................................... 17 2.4 Quality of Research ................................................................................................................... 17 3 Theoretical Framework ....................................................................................................