Managerial considerations in evaluating the role of licensing in technological development strategies

Abstract Increasing managerial efforts to minimize the heavy costs and risks of pioneering the development of major technological advances have increased interest in licensing foreign advances. After reviewing the commonly hoped‐for benefits of such licensing, attention is given to some of the less widely recognized limitations of relying on such expedients as well as to some of the necessary foundations for achieving effective utilizations of such licensed innovations. Attention is also given to the likelihood that a variety of newly emerging major innovations in manufacturing technologies may be less amenable to effective transfer than has been true of many past advances, thereby counseling a reduced role for licensing in the technological development strategies of numerous industries and firms.