Fact of the Week: Firms Are More Than 3 Percent More Likely to Sell Technology to Other Firms If the Technology Hasn’t Yet Been Commercialized

Source: James Cunningham and Albert Link, “Latent Technology as an Outcome of R&D,” Technological Forecasting and Social Change (forthcoming), January 2021.

Commentary: Firms can maintain a competitive edge over other firms by investing in research and development. When they develop new technology, firms have many options for what to do with it, from commercializing it to selling it to other firms. The latter is more likely when firms are uncertain about a technology’s potential profitability, or when other firms are willing to pay large sums for the breakthrough. Using data from the U.S. Small Business Research Program (SBIR), researchers have found that firms are 3.1 percent more likely to sell their technologies to other firms if they have not yet been commercialized. Tech transfer across firms can lead to increased entrepreneurship; technologies that are seen as unprofitable by one can be used by others to create new ideas and industries.