In-licensing university technology and firm innovation

This study examines the relationship between university licensing and firm follow-on innovations in the context of therapeutic biotechnology industry. Our theoretical model bridges two research streams in the organizational learning literature-learning-by-licensing and learning-by-failure- to better understand the contingent nature of such relationship. Specifically, it contends that firms that have experienced early-stage innovation failures are better positioned to uncover new knowledge creation opportunities when exposed to the licensed-in university technology. The empirics are based on a panel dataset analysis of a sample of 190 US therapeutic biotechnology firms observed from 2003 to 2011. Our findings provide empirical support to these contentions, suggesting potential interaction effects between the mechanisms of learning-by-licensing and learning-by-failure.