Determinants of Out-licensing Strategy of Firms: New Empirical Evidence

This paper is the first empirical attempt to explore the preference of firms between unilateral out-licensing and cross-licensing by focusing on competition in product markets. Estimations indicate that the most important determinants of selecting an out-licensing strategy are the characteristics of the technological field to which a firm belongs. Firms strongly prefer crosslicensing to unilateral out-licensing when they are in a technological environment of high fragmentation, complexity, and overlap, as well as in a patent thicket. Cross-licensing is also preferred by domestic firms. Conversely, unilateral out-licensing is preferred by both small and large firms facing high competition in product markets, and in a strong and low overlapping technological environment with intense R&D. This paper contributes to the expansion of current understanding of the out-licensing strategy of firms.