Transcending the Tacit Dimension: Patents, Relationships, and Organizational Integration in Technology Transfer

04 Dec 2012 02:56pm Peter Lee 

As a key driver of innovation and economic growth, university-industry technology transfer has attracted significant attention. Commentators often characterize "formal" technology transfer, which encompasses patenting and licensing university inventions, as proceeding according to market principles. Within this dominant conception, patents disclose and "commodify" academic inventions, which universities then advertise and transfer to private firms in licensing markets.

This Article challenges and refines this market-oriented model of technology transfer. Drawing from empirical studies, it shows that formal technology transfer often involves long-term personal relationships rather than discrete market exchanges. In particular, this Article explores the significant role of tacit, uncodified knowledge in effectively exploiting patented academic inventions. Markets, patents, and licenses are ill-suited to transferring such tacit knowledge, leading licensees to seek direct relationships with academic inventors themselves.

Drawing on the theory of the firm, this Article then argues that these relationships often mature into deeper forms of organizational integration involving faculty inventors, universities, and licensee firms. Presenting a descriptive theory of university-industry technology transfer, it contends that the difficulties of conveying tacit knowledge encourage various forms of organizational integration by which licensees directly absorb faculty inventors (and their tacit knowledge) into their operations. From consulting arrangements to seats on boards of directors, licensees are bringing academic human capital in-house to facilitate commercialization of patented university inventions.

Turning from the descriptive to the normative, this Article assesses the opportunities and drawbacks of academic-industrial integration and offers proposals to improve technology transfer while safeguarding academic norms. It concludes by exploring the implications of tacit knowledge for patent theory and the organization of technology commercialization activities.

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