The information content of technology transfers: a transactions cost analysis of the machine tool industry

Abstract This paper uses the analytical framework of transactions cost economics to develop a series of hypotheses concerning the information content of technology transfers. A method of characterizing ‘information content’ is developed and the hypotheses are then tested against empirical data for the machine tool industry in three countries — the United States. West Germany and the United Kingdom. The results show that the theory is able to predict differences between the nature of the information transferred under licensing agreements and that transferred through internalized transactions.

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