A game theoretic simulation approach on innovative startups' decision process routine: Own marketing vs. licensing

Title
A game theoretic simulation approach on innovative startups' decision process routine: Own marketing vs. licensing
Author
임형록
Keywords
Information; Innovation; Licensing; Market segment; Product life cycle; Simulation
Issue Date
2014-12
Publisher
Science and Engineering Research Support Society
Citation
International Journal of Software Engineering and Its Applications,Vol.8 No.12 [2014],19-30(12쪽)
Abstract
When a startup develops a newer ubiquitous innovation through information science thanincumbents’ current technologies, two strategies are available. It can either take advantage ofthe innovation for its own sake, i.e. own marketing, by creating a new differentiated market orcan license the innovation to an incumbent.Two fundamental conflicts lie in licensing: what ifa non-best technology is transferred and what if the licensee does not fully compensate for thestartup. In one-shot game, the entrepreneurial startup does not release its best technology, i.e.,new innovation; rather it sells a non-best technology only. As a compensation scheme, only alump-sum payment is considered as the imitation cost of the new innovation, done withinformation science, is low. In contrast, the startup shows a different decision making in a repeated game. In that, the startup’s new innovation can have a PLC (product life cycle)until creative destruction interrupts the new innovation.This produces some important results.First, the length of the PLC is positively associated with the likelihood to transfer the besttechnology. Second, a patient entrepreneur would be more likely to transfer the besttechnology. Third, the superior the startup’s new innovation is, the best technology is morelikely to be transferred. A discrete-choice simulation supports these main findings concretely,which conclude that the startup’s best technology can be transferred in a finitely repeatedframework. The startup’s tolerance on its discounted payoff and the PLC of the newinnovation play important roles in the startup’s strategic decision process between own marketing and licensing.
URI
http://www.earticle.net/Article.aspx?sn=239307http://hdl.handle.net/20.500.11754/56010
ISSN
1738-9984
Appears in Collections:
GRADUATE SCHOOL OF BUSINESS[S](경영전문대학원) > BUSINESS ADMINISTRATION(경영학과) > Articles
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