Integrated Knowledge Exploitation: The Complementarity of Product Decelopment and Technology Licensing

In light of increasing licensing activities in many firms, we challenge the common assumption that product development and technology licensing are substitutes. We develop a resource-based framework, which distinguishes a firm’s technological resource base and technology exploitation processes. On this basis, we combine survey data, patent data, and financial data of 228 industrial firms to examine the interactions of a firm’s product development processes and technology licensing processes in order to explain heterogeneity in new product revenues, licensing performance, and firm performance. The results underscore that product development and technology licensing are complements rather than substitutes in integrated knowledge exploitation processes. Technology licensing strengthens the positive effects of product development. The study further shows that the benefits from knowledge exploitation processes depend on a firm’s technological resource base.