Does pre-entry licensing undermine the performance of subsequent independent activities? Evidence from the global aerospace industry, 1944-2000

L. Mulotte, P. Dussauge, W. Mitchell

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Abstract

We study how firms' use of in-licensing for their initial entry to a business domain can detract from the performance of their subsequent autonomous endeavors in the domain. We argue that in-licensing produces high levels of causal ambiguity about factors that drive the performance achieved with the licensed product. In turn, the experience that firms gather through pre-entry licensing is likely to generate superstitious learning and overconfidence that undermine the performance of licensees' subsequent independent operations. The biases will be particularly strong in the face of contextual dissimilarity. We find consistent evidence in a study of firms that entered the global aircraft industry between 1944 and 2000. The research helps advance the understanding of the benefits and costs of markets for technology.
Original languageEnglish
Pages (from-to)358-372
JournalStrategic Management Journal
Volume34
Issue number3
Early online date11 Jul 2012
DOIs
Publication statusPublished - 2013

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Licensing
Aerospace industry
Markets for technology
Costs and benefits
Dissimilarity
Aircraft industry
Overconfidence
Causal ambiguity
Factors

Cite this

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Does pre-entry licensing undermine the performance of subsequent independent activities? Evidence from the global aerospace industry, 1944-2000. / Mulotte, L.; Dussauge, P.; Mitchell, W.

In: Strategic Management Journal, Vol. 34, No. 3, 2013, p. 358-372.

Research output: Contribution to journalArticleScientificpeer-review

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