How does CEO technical expertise influence licensing-out at technology ventures?

One of the ways in which technology ventures create economic value through open innovation in research and development (R&D) is by licensing out patented inventions to other organizations. Scholars have shown that firms differ in the extent to which they engage in licensing-out, and create value from it. This study views Chief Executive Officers (CEOs), especially their technical expertise obtained through scientific doctoral training as well as post-Ph.D. research experience, as an important source of variation. A sample of publicly-listed biotechnology firms tracked from 1991 to 2007 engaged in licensing-out less frequently when led by CEOs with technical expertise, controlling for firms’ resources, including their citation-weighted patents. When they engaged in out-licensing, deals made by CEOs with the greatest technical expertise tended to generate a small decline in the ventures’ market capitalization around the announcement date, whereas deals made by other CEOs spurred increasing market capitalization. This study helps to expand our understanding of how CEOs influence technology ventures’ pursuit of out-licensing, and contributes to the broader conversation about how managerial resources shape technology and innovation outcomes.