Exploring the Impact of Innovation Disclosures on Contracting for Technology Collaborations

This paper encompasses the dynamic nature of information environment and investigates how the disclosures of technological developments impact the bargaining and distribution of value capturing rights during alliance negotiation. We propose that disclosures of technological innovations through credible and exogenous sources reduce the bargaining power of research and development (R&D) startups by increasing the market competition and appropriation concerns. Using data from technology alliances in bio-pharmaceutical industry and taking advantage of the passage of the American Inventors Protection Act (AIPA), an event that causes exogenous changes in information environment through the publication of patent applications, we find that the proportion of intellectual property (IP) rights decreases for the R&D firms with an increase in the availability of technological information. Further, we find that the effects of innovation disclosures enhance with the competition in the R&D firms technology domain, and when there is less external funding available. However, the effect is less prominent when the R&D firms pose valuable assets such as patents.