Management of technology licensing as a foreign market entry mode:the case of leading Italian pharmaceutical and biotech companies

Technology licensing has been recognized for decades as one of the new market entry modes. Companies often issue licenses in foreign countries in order to enter a new market. This paper aims to unearth how companies manage the technology licensing, purposely used by firms in order to enter new markets. Starting from the perspectives given in the Dunning’s eclectic theory on foreign market entry modes, and by adopting the process view perspective from the technology management literature, and also incorporating the Dynamic Capabilities Framework, this paper tries to explain the managerial aspects of technology licensing as the foreign market entry mode. Although technology licensing as a market entry mode has been previously thoroughly explored, limited attention has been given to the possible ways companies approach in managing technology licensing for the new market entry purpose. In the paper authors rely on the multiple case study research approach in order to reveal the relevant managerial aspects implemented by Italian pharmaceutical and biotech companies that exploit technology licensing for the new market entry purpose. The key findings in this paper indicate two points: (i) companies adopt the process view perspective for managing technology licensing as the foreign market entry mode and (ii) throughout the stages of this process firms tend to develop their dynamic capabilities (sensing, seizing and reconfiguring). These research findings contribute to a deeper understanding of technology licensing as a market entry mode in the Innovation and Technology Management literature, but also in the Internationalization literature, by integrating the elements coming from these two research streams. The managerial implications resulting from this paper may be especially useful for the firms operating in the research intensive industries (like chemical, semi-conductor, biotech, etc.), enabling them to recognize the relevant issues in technology licensing process for the market entry purpose.