How does firm innovation size affect the timing of technology licensing? Theory and evidence from China

Abstract

Abstract Previous research has highlighted the importance of firm size for the propensity of technology licensing. However, the currently available knowledge regarding how firm innovation size affects the timing of technology licensing is limited, especially in developing economies such as that of China. Therefore, in the context of the Chinese patent system, this article builds a model for the timing decision of technology licensing from the perspective of licensors. This model theoretically reveals the relationship between firm innovation size and the likelihood of technology licensing at different time points. This article argues that there is a positive relationship between firm innovation size and the likelihood of technology licensing before the patent disclosure date; moreover, there is an inverted U-shaped relationship between the firm innovation size and the likelihood of licensing between the patent disclosure date and the grant date; however, firm innovation size is negatively correlated with the likelihood of licensing after the patent grant date. Empirical results based on 8737 first-time licensing data on invention patents of Chinese firms in 2001–2015 support all predictions. This study contributes to both the scholarly understanding of timing decision making in firms’ technology licensing and the design of technology transfer policies for different firms in China.