Licensing out technologies is a main source of revenue for dedicated technology firms. While licensing exchange has received very little attention in prior marketing literature, it is economically important and poses particular challenges. One major obstacle for obtaining new licensing deals is the information asymmetry between licensors and licensees. The main premise of this study is that the variation among dedicated technology firms of the number of new licensing deals that they obtain can be explained by their voluntary disclosure of strategic information and their position in the industry's licensing and social networks. An empirical study of the biopharmaceutical industry shows that, while voluntarily disclosing strategic information enables dedicated biotechnology firms to sign more new licensing deals, firms should be careful not to disclose too much information. As to network structure, dedicated biotechnology firms with more central positions in the licensing exchange network obtain more new licensing deals, but again, the effect has an inverted-U shape, indicating a dark side of network centrality. Finally, the study provides evidence that licensing exchange is socially embedded. A central position in the social network of board interlocks leads to more new licensing deals. Dedicated technology firms can use these insights to address practical questions, such as how much strategic information they should reveal, as well as to set long-term directions regarding network position.
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