Technology and external conditions at play: a study of learning-by-licensing practices in China

Abstract

Learning-by-licensing is a widely used strategy to build technological capabilities through the acquiring of external technologies. Focusing on the learning process from the perspective of the technology recipient, prior research highlights the organizational level, focusing on the firm’s absorptive capacity and examining its moderating role in the relationship between technology licensing-in and subsequent innovation performance; these studies have neglected both idiosyncratic, individual technological factors as well as regional factors. In this study, we look at both factors and investigate how licensed- technology attributes interact with contextual factors in the learning-by-licensing process. Based on a unique dataset from the China State of Intellectual Property Office (SIPO), our empirical results reveal: (1) licensee firms outperform non- licensee firms pertaining to learning from in-licensed technology in China; (2) both technology generality and external technological conditions positively moderate the relationship between technology in-licensing and a licensee firm’s innovation performance; (3) technology complexity negatively moderates the relationship between technology in-licensing and a licensee firm’s innovation performance; (4) the negative impact of technology complexity can be mitigated in a context of better external technology conditions.