DP6120 Harnessing Success: Determinants of University Technology Licensing Performance

Author(s): Sharon Belenzon, Mark Schankerman
Publication Date: February 2007
Keyword(s): incentives, licensing, local development, performance pay, technology transfer, universities
JEL(s): F23, O31, O32, O33
Programme Areas: Industrial Organization
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=6120

We study the impact of incentive pay, local development objectives and government constraints on university licensing performance. We develop and test a simple contracting model of technology licensing offices, using new survey information together with panel data on U.S. universities for 1995-99. We find that private universities are much more likely to adopt incentive pay than public ones, but ownership does not affect licensing performance conditional on the use of incentive pay. Adopting incentive pay is associated with about 30-40 percent more income per license. Universities with strong local development objectives generate about 30 percent less income per license, but are more likely to license to local (in-state) startup companies. Stronger government constraints are ‘costly’ in terms of foregone license income and startup activity. These results are robust to controls for observed and unobserved heterogeneity.