R&D and Licensing Strategies: Do They Influence US Start-Upss Growth?

Abstract

The paper analyses the theoretical background regarding R&D and licensing strategies as determinants of firm growth, especially that of start-ups. Summarizing the set of studies relating firms’ R&D intensity to growth, we conclude these studies reveal three approaches that complement each other and are crucial in explaining firms’ performance, namely firms’ investment in R&D activities and in pursuing a corporate R&D strategy, the resource-based view and firms’ innovativeness, either in processes or products, following patenting and exploitation strategies, by using for instance licensing agreements. This paper differs significantly from previous studies in one aspect. It analyses corporate R&D strategy factors (such as R&D intensity, patent portfolio, and licensing strategies, e.g. in-licensing and out-licensing of Intellectual Property (IP) Rights) that are directly connected to start-up growth. The topic of licensing strategies is explored concerning the R&D strategic positioning of start-ups, which is an additional caveat found in the existent literature. Therefore, start-ups should make an economic analysis of licensing strategies and activities, in order to define the best possible IP management. The paper estimates the effects of US start-ups’ R&D and licensing strategies on their growth, based on R&D intensity, start-ups’ patents and in-licensing and out-licensing activities. The sample of the study consists of all firms (818) found in the Kauffman Foundation Survey (KFS) from high-tech and medium high-tech sectors, in the period 2004-2010. In this survey we found three high-tech sectors, 32 (manufacture of radio, television and communication equipment and apparatus) and 33 (manufacture of medical, precision and optical instruments, watches and clocks) for manufacturing firms and 72 (computer and related activities) for knowledge-intensive service firms and 1 medium high-tech sector, namely 31 (manufacture of electric machinery and apparatus).