Economics Innovation

Markets for Technology

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Markets for Technology The Economics of Innovation and Corporate Strategy

Ashish Arora, Andrea Fosfuri, and Alfonso Gambardella

The MIT Press Cambridge, Massachusetts London, England

© 2001 Massachusetts Institute of Technology All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from the publisher. This book was set in Palatino by Graphic Composition, Inc., Athens, Georgia, using QuarkXPress 4.1. Printed and bound in the United States of America. Library of Congress Cataloging-in-Publication Data Arora, Ashish. Markets for technology : the economics of innovation and corporate strategy / Ashish Arora, Andrea Fosfuri, Alfonso Gambardella. p. cm. Includes bibliographical references and index. ISBN 0-262-01190-5 1. High technology industries—Management. 2. Technology—Marketing. 3. License agreements. 4. Technology transfer—Economic aspects. 5. Technological innovations—Economic aspects. 6. Globalization—Economic aspects. 7. Employees—Effect of technological innovations on. I. Fosfuri, Andrea. II. Gambardella, Alfonso. III. Title. HD62.37 .A76 2002 338'.064—dc21 2001044324

This book is dedicated to Esther (AF), Sonal (AA), and Veevan (AG)

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Contents

Preface and Acknowledgments 1

ix

Markets for Technology: Why Do We See Them, Why We Don’t See More of Them, and Why We Should Care 1 Markets for Technology: Extent and Development Preliminary Evidence 17 45 15

I 2 3

The Division of Innovative Labor in High-Tech Industries 91

II Limitations and Determinants 4

Context Dependence, Sticky Information, and the Limits of the Market for Technology 93 Intellectual Property Rights and the Licensing of Know-How 115 Markets for Technology and the Size of the Market: Adam Smith and the... [continues]

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