Managing technology licensing for stochastic R&D: from the perspective of an enterprise information system

Enterprise information technology (IT) plays an important role in technology innovation management for high-tech enterprises. However, to date most studies on enterprise technology innovation have assumed that the research and development (R&D) outcome is certain. This assumption does not always hold in practice. Motivated by the current practice of some IT industries, we establish a three-stage duopoly game model, including the R&D stage, the licensing stage and the output stage, to investigate the influence of bargaining power and technology spillover on the optimal licensing policy for the innovating enterprise when the outcome of R&D is uncertain. Our results demonstrate that (1) if the licensor has low (high) bargaining power, fixed-fee (royalty) licensing is always superior to royalty (fixed-fee) licensing to the licensor regardless of technology spillover; (2) if the licensor has moderate bargaining power and technology spillover is low (high) as well, fixed-fee (royalty) licensing is superior to royalty (fixed-fee) licensing; (3) under two-part tariff licensing and the assumption of licensors with full bargaining power, if a negative prepaid fixed fee is not allowed, two-part tariff licensing is equivalent to royalty licensing which is the optimal licensing policy; if negative prepaid fixed fee is allowed, the optimal policy is two-part tariff licensing.