Empirical Analysis of Technology Diffusion in the Biotechnology Sector in San Diego - Stage of Development and Licensing University Inventions by Start-Up and Established Firms

In this paper I analyze the correlation between the licensing activity by start-ups and established firms (mainly in the biotech sector) and the inventions’ stages of development. Using data from the San Diego region on licensing new technologies and a new variable to characterize the inventions, stage of development. I also study the correlation between this variable and two other outcomes: patenting activity and royalty generation. The decision of firms to license at various stages of development could be affected by comparative advantage principle or by asymmetry of information. The main results show that the established firms are more likely to license more advanced stage inventions, while start-up firms are more likely to license embryonic and early stage inventions. The results regarding the likelihood of royalty generations by start up and established firms across stages of development also follow a similar pattern. The findings could further the understanding of how technology diffusion process takes place in the biotechnology sector. In addition it has implication with regard to the process of firm creation process and management