The dangers of technology transfers

Firms operating with a license tend to overestimate their own capabilities on the performance of the products they sell. They think they know ho to manufacture them but they do not. Hence, selling a license tends to act a safeguard against the emergence of real competitors, as it inhibits the ability of licensees to develop autonomously afterwards.

The benefits of licensed manufacturing are overstated

Source : Dussauge, P, Mitchell, W. & L. Mulotte (2012), Strategic Management Journal, “Does pre-entry licensing undermine the performance of susbsequent “, November, vol. 114, n°2, pp. 366-404.