infonet-economy

New ventures compete by creating innovative products. Liabilities of newness and inexperience, limited resources, rapid technological obsolescence and constantly changing market conditions often encourage new ventures to license other companies' technologies to complement and augment their internally developed innovations. Building on the knowledge-based view of the firm, we propose that the intensity of new ventures' use of inward licensing reflects the demands of their industries and competitive strategies. The results of an empirical study of 361 US new ventures show that industry characteristics and competitive strategy influence their inward licensing as a means of lowering costs and maintaining strategic flexibility while building their capabilities.