Danish companies can gain ground through technology licenses

Numerous Danish companies think that it does not pay to buy external knowledge and try constantly to reinvent the wheel.  The American approach is very different. New CBS research, published in the scientific journal Strategic Management Journal, documents that licensing speeds up the innovation process in American companies.

- Our results have shown that American companies, who borrow their technology from external sources, take a huge leap when it comes to product development. They almost innovate twice as fast. In Denmark, we do not know yet how many companies make use of licensing-in, but the number is increasing and even more Danish companies should realise this, says Toke Reichstein, Professor in Innovation and Entrepreneurship at CBS. He has conducted this research together with Maria Isabella Leone, Assistant Professor at LUISS Business School in Rome.

As the first researchers, they have measured the innovation process pace in companies who have bought a license. They have compared American biotech, pharmaceutical and electronics companies in a period from 1980-2008 and have examined the connection between licensing-in and the pace in which the companies introduce their inventions.

Advantage to both small and large companies
A typical example of licensing-in is biotech companies who discover a new enzyme. They them let a pharmaceutical company buy a license to use their enzyme to develop new medicine. But several industries can benefit from licensing-in.

- Danish high tech companies in the biotech, pharmaceutical, electronics or chemical industry can benefit greatly from licensing-in, but so can non-high tech companies, who are trying to position themselves on a market by winning the technological race, says Toke Reichstein.

He stresses that large companies such as Carlsberg and Rockwool and smaller companies such as Zealand Pharma and AMBU (hospital equipment suppliers) may potentially benefit from buying licenses.

However, Danish companies should not just run out and buy technologies from others. It is crucial to scan the market first for the right patents for technologies that can solve the problems of the company, says Toke Reichstein.

For more information, contact Toke Reichstein, tel: +45 3815 2382, email: tr.ino@cbs.dk

About the research
The research builds on an analysis of 266 American companies in the electronics, biotech and pharma industry. The researchers followed the companies in a period from 1980-2008 and studied whether the companies that made use of licensing-in, were granted patents on their inventions faster than companies who did not purchase a license. In the USA, the number of companies, who bought rights for new technologies, increased by 20 per cent from 2009 to 2010. The research is part of CBS' World Class Research Environment Initiative (WCRE).