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Given that the development of new technologies by competing firms has the potential to destabilize an industry’s competitive landscape, managers need to carefully assess the alternatives on which they rely to continuously adjust their firm’s R&D. Using technology licensing, firms can be in a unique position to directly and quickly respond to competitors’ technological innovations. This is particularly useful when firms are faced with threats that require a prompt reaction that will allow them to remain competitive and sustain their capacity to innovate.
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Most companies fear competition from a rival’s product innovations and the risk of falling behind their industry’s technological frontier. Firms affected by such competitive pressure usually react by trying to strengthen their R&D capabilities and close the gap between their and their rival’s technologies as quickly as possible. But how exactly can firms catch up? Our research shows that rather than innovating from scratch in house or partnering with others in strategic alliances, the most effective solution may be to buy access to an already existing technology and incorporate it into your R&D.
When we studied how 206 publicly listed biopharmaceutical firms reacted to …
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