Title

Markets for Technology and Their Implications for Corporate Strategy

Date of Original Version

2000

Type

Working Paper

Abstract or Table of Contents

Although market transactions for technologies, ideas, knowledge or information are limited by several well known imperfections, there is increasing evidence that they have become more common than in the past. In this paper we argue that these markets change the traditional mindset in which the only available option for a company wishing to introduce an innovation is to develop the technology in-house, or for a company developing the technology to own the downstream assets needed to manufacture and commercialize the goods. This affects the role of companies both as technology users (they can “buy” technologies) and as technology suppliers (they can “sell” technologies). The implications for management include more proactive management of intellectual property, greater attention to external monitoring of technologies, and organizational changes to support technology licensing, joint-ventures and acquisition of external technology. For entrepreneurial startups, markets for technology make a focused business model more attractive. At the industry level, markets for technology may lower barriers to entry and increase competition, with obvious implications for the firms’ broader strategy as well.