Technology acquisition through licensing. Implications for firm strategy

Nowadays licensing practices have increased in importance and relevance driving the widespread diffusion of markets for technologies. Firms are shifting from a tactical to a strategic attitude towards licensing, addressing both business and corporate level objectives. The Open Innovation Paradigm has been embraced. Firms rely more and more on collaboration and external sourcing of knowledge. This new model of innovation requires firms to leverage on external technologies to unlock the potential of firms’ internal innovative efforts. In this context, firms’ competitive advantage depends both on their ability to recognize available opportunities inside and outside their boundaries and on their readiness to exploit them in order to fuel their innovation process dynamically. Licensing is one of the ways available to firm to ripe the advantages associated to an open attitude in technology strategy. From the licensee’s point view this implies challenging the so-called not-invented-here syndrome, affecting the more traditional firms that emphasize the myth of internal research and development supremacy. This also entails understanding the so-called cognitive constraints affecting the perfect functioning of markets for technologies that are associated to the costs for the assimilation, integration and exploitation of external knowledge by recipient firms. My thesis aimed at shedding light on new interesting issues associated to in-licensing activities that have been neglected by the literature on licensing and markets for technologies. The reason for this gap is associated to the “perspective bias” affecting the works within this stream of research. With very few notable exceptions, they have been generally concerned with the investigation of the so-called licensing dilemma of the licensor – whether to license out or to internally exploit the in-house developed technologies, while neglecting the licensee’s perspective. In my opinion, this has left rooms for improving the understanding of the determinants and conditions affecting licensing-in practices. From the licensee’s viewpoint, the licensing strategy deals with the search, integration, assimilation, exploitation of external technologies. As such it lies at the very hearth of firm’s technology strategy. Improving our understanding of this strategy is thus required to assess the full implications of in-licensing decisions as they shape firms’ innovation patterns and technological capabilities evolution. It also allow for understanding the so-called cognitive constraints associated to the not-invented-here syndrome. In recognition of that, the aim of my work is to contribute to the theoretical and empirical literature explaining the determinants of the licensee’s behavior, by providing a comprehensive theoretical framework as well as ad-hoc conceptual tools to understand and overcome frictions and to ease the achievement of satisfactory technology transfer agreements in the marketplace. Aiming at this, I investigate licensing-in in three different fashions developed in three research papers. In the first work, I investigate the links between licensing and the patterns of firms’ technological search diversification according to the framework of references of the Search literature, Resource-based Theory and the theory of general purpose technologies. In the second paper - that continues where the first one left off – I analyze the new concept of learning-bylicensing, in terms of development of new knowledge inside the licensee firms (e.g. new patents) some years after the acquisition of the license, according to the Dynamic Capabilities perspective. Finally, in the third study, Ideal with the determinants of the remuneration structure of patent licenses (form and amount), and in particular on the role of the upfront fee from the licensee’s perspective. Aiming at this, I combine the insights of two theoretical approaches: agency and real options theory.

The impact of R&D in firm value across Europe

In this thesis the impact of R&D expenditures on firm market value and stock returns is examined. This is performed in a sample of European listed firms for the period 2000-2009. I apply different linear and GMM econometric estimations for testing the impact of R&D on market prices and construct country portfolios based on firms’ R&D expenditure to market capitalization ratio for studying the effect of R&D on stock returns. The results confirm that more innovative firms have a better market valuation,investors consider R&D as an asset that produces long-term benefits for corporations. The impact of R&D on firm value differs across countries. It is significantly modulated by the financial and legal environment where firms operate. Other firm and industry characteristics seem to play a determinant role when investors value R&D. First, only larger firms with lower financial leverage that operate in highly innovative sectors decide to disclose their R&D investment. Second, the markets assign a premium to small firms, which operate in hi-tech sectors compared to larger enterprises for low-tech industries. On the other hand, I provide empirical evidence indicating that generally highly R&D-intensive firms may enhance mispricing problems related to firm valuation. As R&D contributes to the estimation of future stock returns, portfolios that comprise high R&D-intensive stocks may earn significant excess returns compared to the less innovative after controlling for size and book-to-market risk. Further, the most innovative firms are generally more risky in terms of stock volatility but not systematically more risky than low-tech firms. Firms that operate in Continental Europe suffer more mispricing compared to Anglo-Saxon peers but the former are less volatile, other things being equal. The sectors where firms operate are determinant even for the impact of R&D on stock returns; this effect is much stronger in hi-tech industries.

Collaborative Change: Environmental Jolt, Network (Re)Design and Firm Performance

Motivated by the need to understand which are the underlying forces that trigger network evolution, we develop a multilevel theoretical and empirically testable model to examine the relationship between changes in the external environment and network change. We refer to network change as the dissolution or replacement of an interorganizational tie, adding also the case of the formation of new ties with new or preexisting partners. Previous research has paid scant attention to the organizational consequences of quantum change enveloping entire industries in favor of an emphasis on continuous change. To highlight radical change we introduce the concept of environmental jolt. The September 11 terrorist attacks provide us with a natural experiment to test our hypotheses on the antecedents and the consequences of network change. Since network change can be explained at multiple levels, we incorporate firm-level variables as moderators. The empirical setting is the global airline industry, which can be regarded as a constantly changing network of alliances. The study reveals that firms react to environmental jolts by forming homophilous ties and transitive triads as opposed to the non jolt periods. Moreover, we find that, all else being equal, firms that adopt a brokerage posture will have positive returns. However, we find that in the face of an environmental jolt brokerage relates negatively to firm performance. Furthermore, we find that the negative relationship between brokerage and performance during an environmental jolt is more significant for larger firms. Our findings suggest that jolts are an important predictor of network change, that they significantly affect operational returns and should be thus incorporated in studies of network dynamics.

Multidimensional Measures of Firm Competitiveness: a Model-Based Approach

The concept of competitiveness, for a long time considered as strictly connected to economic and financial performances, evolved, above all in recent years, toward new, wider interpretations disclosing its multidimensional nature. The shift to a multidimensional view of the phenomenon has excited an intense debate involving theoretical reflections on the features characterizing it, as well as methodological considerations on its assessment and measurement. The present research has a twofold objective: going in depth with the study of tangible and intangible aspect characterizing multidimensional competitive phenomena by assuming a micro-level point of view, and measuring competitiveness through a model-based approach. Specifically, we propose a non-parametric approach to Structural Equation Models techniques for the computation of multidimensional composite measures. Structural Equation Models tools will be used for the development of the empirical application on the italian case: a model based micro-level competitiveness indicator for the measurement of the phenomenon on a large sample of Italian small and medium enterprises will be constructed.

Reputation, VC funding, and innovation: Evidence from the UK Micro and Nanotechnology sector

Startups’ contributions on economic growth have been widely realized. However, the funding gap is often a problem limiting startups’ development. To some extent, VC can be a means to solve this problem. VC is one of the optimal financial intermediaries for startups. Two streams of VC studies are focused in this dissertation: the criteria used by venture capitalists to evaluate startups and the effect of VC on innovation. First, although many criteria have been analyzed, the empirical assessment of the effect of startup reputation on VC funding has not been investigated. However, reputation is usually positively related with firm performance, which may affect VC funding. By analyzing reputation from the generalized visibility dimension and the generalized favorability dimension using a sample of 200 startups founded from 1995 operating in the UK MNT sector, we show that both the two dimensions of reputation have positive influence on the likelihood of receiving VC funding. We also find that management team heterogeneity positively influence the likelihood of receiving VC funding. Second, studies investigating the effect of venture capital on innovation have frequently resorted to patent data. However, innovation is a process leading from invention to successful commercialization, and while patents capture the upstream side of innovative performance, they poorly describe its downstream one. By reflecting the introduction of new products or services trademarks can complete the picture, but empirical studies on trademarking in startups are rare. Analyzing a sample of 192 startups founded from 1996 operating in the UK MNT sector, we find that VC funding has positive effect on the propensity to register trademarks, as well as on the number and breadth of trademarks.

Relationships between plant diversity and environmental heterogeneity in rupicolous grasslands on gypsum. The case study of Alysso-Sedion albi (Habitat 6110).

Plant communities on weathered rock and outcrops are characterized by high values in species richness (Dengler 2006) and often persist on small and fragmented surfaces. Yet very few studies have examined the relationships between heterogeneity and plant diversity at small scales, in particular in poor-nutrient and low productive environment (Shmida and Wilson 1985, Lundholm 2003). In order to assess these relationships both in space and time in relationship, two different approaches were employed in the present study, in two gypsum outcrops of Northern Apennine. Diachronic and synchronic samplings from April 2012 to March 2013 were performed. A 50x50 cm plot was used in both samplings such as the sampling unit base. The diachronic survey aims to investigate seasonal patterning of plant diversity by the use of images analysis techniques integrated with field data and considering also seasonal climatic trend, the substrate quality and its variation in time. The purpose of the further, synchronic sampling was to describe plant diversity pattern as a function of the environmental heterogeneity meaning in substrate typologies, soil depth and topographic features. Results showed that responses of diversity pattern depend both on the resources availability, environmental heterogeneity and the manner in which the different taxonomic group access to them during the year. Species richness and Shannon diversity were positively affected by increasing in substrate heterogeneity. Furthermore a good turnover in seasonal species occurrence was detected. This vegetation may be described by the coexistence of three groups of species which created a gradient from early colonization stages, characterized by greater slope and predominance of bare rock, gradually to situation of more developed soil.

The impact of intraclonal heterogeneity on the outcomes of Multiple Myeloma patients treated with new drugs

Understanding the biology of Multiple Myeloma (MM) is of primary importance in the struggle to achieve a cure for this yet incurable neoplasm. A better knowledge of the mechanism underlying the development of MM can guide us in the development of new treatment strategies. Studies both on solid and haematological tumours have shown that cancer comprises a collection of related but subtly different clones, a feature that has been termed “intra-clonal heterogeneity”. This intra-clonal heterogeneity is likely, from a “Darwinian” natural selection perspective, to be the essential substrate for cancer evolution, disease progression and relapse. In this context the critical mechanism for tumour progression is competition between individual clones (and cancer stem cells) for the same microenvironmental “niche”, combined with the process of adaptation and natural selection. The Darwinian behavioural characteristics of cancer stem cells are applicable to MM. The knowledge that intra-clonal heterogeneity is an important feature of tumours’ biology has changed our way to addressing cancer, now considered as a composite mixture of clones and not as a linear evolving disease. In this variable therapeutic landscape it is important for clinicians and researchers to consider the impact that evolutionary biology and intra-clonal heterogeneity have on the treatment of myeloma and the emergence of treatment resistance. It is clear that if we want to effectively cure myeloma it is of primarily importance to understand disease biology and evolution. Only by doing so will we be able to effectively use all of the new tools we have at our disposal to cure myeloma and to use treatment in the most effective way possible. The aim of the present research project was to investigate at different levels the presence of intra-clonal heterogeneity in MM patients, and to evaluate the impact of treatment on clonal evolution and on patients’ outcomes.

Analysis of morphological and functional heterogeneity in ct perfusion images of lung tumours

Questa tesi si propone di innovare lo stato dell’arte dei metodi di analisi dell’eterogeneità in lesioni polmonari attualmente utilizzati, affiancando l’analisi funzionale (emodinamica) a quella morfologica, grazie allo sviluppo di nuove feature specifiche. Grazie alla collaborazione tra il Computer Vision Group (CVG) dell’Università di Bologna e l’Unità Operativa di Radiologia dell’IRCCS-IRST di Meldola (Istituto di Ricovero e Cura a Carattere Scientifico – Istituto Scientifico Romagnolo per lo Studio e la Cura dei Tumori), è stato possibile analizzare un adeguato numero di casi reali di pazienti affetti da lesioni polmonari primitive, effettuando un’analisi dell’eterogeneità sia su sequenze di immagini TC baseline sia contrast-enhanced, consentendo quindi un confronto tra eterogeneità morfologica e funzionale. I risultati ottenuti sono infine discussi sulla base del confronto con le considerazioni di natura clinica effettuate in cieco da due esperti radiologi dell’IRCCS-IRST.

Flexibility and firm value: the role of inventories

In the present thesis I study the contribution to firm value of inventories management from a risk management perspective. I find a significant contribution of inventories to the value of risk management especially through the operating flexibility channel. In contrast, I do not find evidence supporting the view of inventories a reserve of liquidity. Inventories substitute, albeit not perfectly, derivatives or cash holdings. The substitution between hedging with derivatives and inventory is moderated by the correlation between cash flow and the underlying asset in the derivative contract. Hedge ratios increase with the effectiveness of derivatives. The decision to hedge with cash holdings or inventories is strongly influenced by the degree of complementarity between production factors and by cash flow volatility. In addition, I provide a risk management based explanation of the secular substitution between inventories and cash holdings documented, among others, in Bates et al. (2009), Journal of Finance. In a sample of U.S. firms between 1980 and 2006, I empirically confirm the negative relation between inventories and cash and provide evidence on the poor performance of investment cash flow sensitivities as a measure of financial constraints also in the case of inventories investment. This result can be explained by firms' scarce reliance on inventories as a reserve of liquidity. Finally, as an extension of my study, I contrast with empirical data the theoretical predictions of a model on the integrated management of inventories, trade credit and cash holdings.

Heterogeneity in vaccination coverage explains the size and occurrence of measles epidemics in German surveillance data

The objective of this study was to characterize empirically the association between vaccination coverage and the size and occurrence of measles epidemics in Germany. In order to achieve this we analysed data routinely collected by the Robert Koch Institute, which comprise the weekly number of reported measles cases at all ages as well as estimates of vaccination coverage at the average age of entry into the school system. Coverage levels within each federal state of Germany are incorporated into a multivariate time-series model for infectious disease counts, which captures occasional outbreaks by means of an autoregressive component. The observed incidence pattern of measles for all ages is best described by using the log proportion of unvaccinated school starters in the autoregressive component of the model.