Contractual implications of international trade in tacit knowledge

Abstract

This article searches for evidence on the additional difficulty the parties have in contracting for the transfer of know-how relative to the transfer of patented technology. A sample of contracts for the acquisition of technology Spanish firms in 1991 is analysed to find a positive relationship between contract duration and the likelihood of transferring know-how in unaffiliated transfers. It is also found that technical assistance is bundled together with the transfer of know-how, suggesting that the parties try to mitigate opportunistic behaviour on the licensor's side.

Acknowledgements

I thank the anonymous referee for his helpful comments. Financial support from the Spanish Ministry of Science and Technology (SEC2002-01839) is gratefully acknowledged. All errors are my own.

Notes

¹ Included in the sample are transfers of software only if it is to be used by the licensee. There are some contracts in the sample where the licensee merely acts as a software retailer. These transfers have been explicitly excluded from the final sample.

² In two cases, neither duration nor sales were observed.