Buying technology for product development in smaller firms

Abstract

This article examines the underlying dimensions and relative importance of the perceived costs and benefits of new product technology licensing by small Australian engineering firms. It also investigates the impact of the firm's satisfaction with the performance of its licensed new products on its cost and benefit perceptions. We found that the need to gain competitive advantage and improve the firm's technical skills are the two most important perceived benefits for licensing. In terms of costs, the complexity of the licensing process and entry/exit costs are the major impediments for small firms. We also found that firms satisfied and dissatisfied with their licensed technology differ significantly mainly in their perceptions of the costs of licensing. A discussion of the results and several implications for managers and researchers are presented.