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This study examined the impacts of technological uncertainty, strong internal

complementary assets position, characteristics of knowledge search, and collaboration on the organizational path of commercialization. Departing from Teece’s framework on the profitability of innovation, we synthesized various theories to explain why firms choose different organizational paths in the downstream commercialization process. We found that technological uncertainty suppresses external paths of commercialization. The main argument of this hypothesis builds on TCE but also incorporates the evolutionary explanation of technological development. Stage of technological development,

technological uncertainty, and profitability of innovation are interrelated with each other.

As Teece argued and many following studies showed, strong internal position for the complementary assets have a strong positive impact on the internal commercialization paths. Also, as Tushman and Anderson argued, we found that there was a strong organizational inertia for a firm to tend to keep doing what it had been doing. This implies that firms’ innovation activities would have a strong path dependency and, therefore, may well fall into the competence trap (Levinthal and March, 1993; Levitt and March, 1988). This finding contributes to the Teecian framework of profitability of innovation and arguments of markets for technology by providing a direct test of the effects of co-specialized complementary assets on a choice of commercialization paths.

Also, in explaining the relationship between strong coupling with internal complementary assets and vertical integration of downstream commercialization processes, we enriched the discourse by synthesizing theoretical implications from TCE and KBV of a firm. One avenue of future research will be looking at how the effects of co-specialized assets on commercialization paths are moderated by the characteristics of technology (e.g., general purpose v. specialized) or by the stage of the technology development cycle. Our

conjecture is that the impact of co-specialized assets on the choice of commercialization paths will be weaker for general-purpose invention or in mature technology.

Further departing from Teece, we argue that openness of innovation processes and network relationship should affect the choice of commercialization path. Consistent with our hypothesis, empirical results show that external knowledge from industrial nature increases the propensity of internal commercialization. Industrial knowledge tends to focus more on specific industrial problems and require for more hands-on knowledge typically acquired from field experience. These characteristics of industrial knowledge would make coherent authoritative controls more efficient than distributed controls across firm boundaries. As hinted by KBV, internal synergy of this type of technology is

expected to be higher. Detailed examination of external paths of commercialization revealed some interesting aspects of public knowledge. External public knowledge has a positive impact on licensing, particularly strong impact on formation of patent-based corporate spin-offs, and either weaker or even negative impact on cross-licensing. Furthermore, proceeding one step further from the open innovation arguments, it shows that the nature of external knowledge should be taken into consideration in studying

innovation. The previous empirical studies focused on how broadly or deeply firms sourced external knowledge and how they affected intermediate output of innovation process or firm performance (Katila and Ahuja, 2002; Laursen and Salter, 2006). In doing so, they did not turn their attentions to the qualitative differences of sourced knowledge. Other studies examined a limited number of leading firms to show how they had

successfully utilized some types of external knowledge for innovation (Dyer and Nobeoka, 2000; von Hippel, 1988). This study attempts to overcome the weaknesses of both studies by examining the impact of different types of external knowledge in a large- scale, cross-industry sample. Furthermore, it reveals that not only the different nature of external knowledge has a different impact on innovation but also it would be bound with a different commercialization strategy. While external industrial knowledge is conducive to internal commercialization, external public knowledge spawns external

commercialization. Or, the other way around, firms that chose an internal integration strategy would have sought more industrial knowledge, while firms that chose to provide their inventions to external parties for commercialization might have relied more on public knowledge. Certainly, the analysis leaves more questions to be answered. Although we tried to justify distinctiveness between external industrial and public knowledge in the context of mode of commercialization both theoretically and

empirically, it still leaves ambiguity in concepts and measurement. First, it overlaps with a basic-applied distinction. We argued that they were different because external public sources can deliver an applied type of knowledge, and external industrial sources can deliver a basic type of knowledge. We also controlled for the basicness of an R&D project. We suggested—separate from a basic-applied nature—technological fitness,

learning-curve effects, and inclusion of organizational routines as some discriminating characteristics of this distinction. However, they need to be better articulated in the practical context. Second, external public knowledge is confounded with the maturity of the field of technology, as we discussed in Part II. This also contributes to the ambiguity. In summary, further research on the characteristics, drivers, and impact of the different types of knowledge is required.

Collaboration has diverging effects on the choice of commercialization paths, depending on the characteristics of collaborating partners. While collaboration with firms in a vertical relationship tends to favor internal paths, collaboration with firms in a horizontal relationship tends to favor external paths. In particular, horizontal collaboration is

strongly associated with licensing (both unilateral and cross-licensing). This finding shows that collaborative networks, net of knowledge flows, influence the organizational trajectory of commercialization. Furthermore, it shows that relative position of the

innovator in the network is indeed an important predictor of the trajectory. By the relative position in the network, we do not mean the structural or topological relations that many studies of networks focus on (Owen-Smith and Powell, 2004), but the relative positions in a value chain or in competitive relations in the product markets. Previous studies argued why particular ties affect the firm or innovation performance (Afuah, 2000; Dyer and Nobeoka, 2000; Gulati and Higgins, 2003; Uzzi, 1996). This study contributes to the field by arguing and showing that firms utilize different types of networks for different innovation strategies. As a novel contribution, it shows that perspectives on collaborative networks have unique explanatory powers in the region that TCE cannot address. Where

technological uncertainty is high, collaboration has a stronger impact on the choice of the organizational path of the downstream process of innovation. This finding empirically corroborates Granovetter and Powell’s (Granovetter, 1985; Powell, 1990) arguments that economic theories alone are incomplete in explaining social behavior so that network perspectives can complement them.