A MICROECONOMETRIC ANALYSIS OF TECHNOLOGY-TRANSFER - THE CASE OF LICENSING AGREEMENTS OF JAPANESE FIRMS

This paper examines investment in foreign technology by Japanese firms, using previously unexplored data on technology transfer to Japan. The relationship between the acquisition of foreign technology and firm size, liquidity and affiliation with a corporate group, or keiretsu, is analyzed. Our results indicate that the number of licensing agreements a firm signs is positively and strongly related to its size, although the relationship is concave. We also find that liquidity is an important consideration in the firm's decision to invest in foreign technology. Keiretsu-affiliated firms acquire relatively more foreign technology than independent firms, suggesting that corporate groups have played an important role in Japan's technological progress.