Share:


Optimal licensing strategy of green technology with corporate social responsibility

    Dongdong Li Affiliation
    ; Chengxuan Shang   Affiliation
    ; Chen Jiao Affiliation

Abstract

This study investigates the green technology licensing strategies of firms with corporate social responsibility (CSR) in a duopoly market. The results show that in the absence of CSR, the optimal licensing contract is fixed-fee licensing for a patent holding firm. In the precent of CSR, the optimal licensing contract for a patent holding firm switches from fixed-fee licensing to royalty licensing with increasing level of CSR if the reduction cost of emissions is high. Moreover, we show that the profit goal of firm and the social welfare goal of government are not always mutually exclusive. If the level of CSR is low, a uniform licensing contract would be preferable. If the level of CSR is high, the optimal licensing contract is inconsistent. Finally, we show that CSR is not always beneficial to the social welfare while CSR benefits the environment. Social welfare benefits from increased CSR degree, but vice versa is true when CSR degree decreases. This research may provide valuable insights into licensing and CSR literature.


First published online 19 October 2022

Keyword : corporate social responsibility, licensing contract, green technology

How to Cite
Li, D., Shang, C., & Jiao, C. (2022). Optimal licensing strategy of green technology with corporate social responsibility. Technological and Economic Development of Economy, 28(6), 1791–1817. https://doi.org/10.3846/tede.2022.17662
Published in Issue
Nov 15, 2022
Abstract Views
502
PDF Downloads
438
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

References

Antelo, M., & Sampayo, A. (2017). On the number of licenses with signalling. The Manchester School, 85(6), 635–660. https://doi.org/10.1111/manc.12157

Bhattacharya, C. B., & Sen, S. (2003). Consumer-company identification: A framework for understanding consumers’ relationships with companies. Journal of Marketing, 67(2), 76–88. https://doi.org/10.1509/jmkg.67.2.76.18609

Chen, Y.-W., Yang, Y.-P., Wang, L. F. S., & Wu, S.-J. (2014). Technology licensing in mixed oligopoly. International Review of Economics and Finance, 31, 193–204. https://doi.org/10.1016/j.iref.2014.02.002

Chuang, S. P., & Huang, S. J. (2018). The effect of environmental corporate social responsibility on environmental performance and business competitiveness: The mediation of green information technology capital. Journal of Business Ethics, 150(4), 991–1009. https://doi.org/10.1007/s10551-016-3167-x

Dimitrova, M., Treapat, L. M., & Tulaykova, I. (2021). Value at risk as a tool for economic-managerial decision-making in the process of trading in the financial market. Ekonomicko-manazerske Spektrum, 15(2), 13–26. https://doi.org/10.26552/ems.2021.2.13-26

Durana, P., Perkins, N., & Valaskova, K. (2021). Artificial intelligence data-driven internet of things systems, real-time advanced analytics, and cyber-physical production networks in sustainable smart manufacturing. Economics, Management, and Financial Markets, 16(1), 20–30. https://doi.org/10.22381/emfm16120212

Ee, M. S., Chao, C. C., Wang, L. F., & Eden, S. H. (2018). Environmental corporate social responsibility, firm dynamics and wage inequality. International Review of Economics & Finance, 56, 63–74. https://doi.org/10.1016/j.iref.2018.03.018

Erutku, C., & Richelle, Y. (2007). Optimal licensing contracts and the value of a patent. Journal of Economics & Management Strategy, 16(2), 407–436. https://doi.org/10.1111/j.1530-9134.2007.00144.x

Fanti, L., & Buccella, D. (2017). Bargaining agenda in a unionized monopoly with network effects: When corporate social responsibility may be welfare-reducing. Economia Politica, 34(3), 471–489. https://doi.org/10.1007/s40888-016-0051-1

Fanti, L., & Buccella, D. (2018). Corporate social responsibility and the choice of price versus quantities. Japan and the World Economy, 48, 71–78. https://doi.org/10.1016/j.japwor.2018.08.004

Fanti, L., & Buccella, D. (2019). Managerial delegation games and corporate social responsibility. Managerial and Decision Economics, 40(6), 610–622. https://doi.org/10.1002/mde.3031

Fauli-Oller, R., & Sandonis, J. (2002). Welfare reducing licensing. Games and Economic Behavior, 41(2), 192–205. https://doi.org/10.1016/S0899-8256(02)00513-4

Flammer, C. (2013). Corporate social responsibility and shareholder reaction: The environmental awareness of investors. Academy of Management Journal, 56(3), 758–781. https://doi.org/10.5465/amj.2011.0744

Fukuda, K., & Ouchida, Y. (2020). Corporate social responsibility (CSR) and the environment: Does CSR increase emissions? Energy Economics, 92, 104933. https://doi.org/10.1016/j.eneco.2020.104933

Goering, G. E. (2012). Corporate social responsibility and marketing channel coordination. Research in Economics, 66(2), 142–148. https://doi.org/10.1016/j.rie.2011.10.001

Goering, G. E. (2014). The profit‐maximizing case for corporate social responsibility in a bilateral monopoly. Managerial and Decision Economics, 35(7), 493–499. https://doi.org/10.1002/mde.2643

Hattori, K. (2017). Optimal combination of innovation and environmental policies under technology licensing. Economic Modelling, 64, 601–609. https://doi.org/10.1016/j.econmod.2017.04.024

Hattori, M., & Tanaka, Y. (2018). License and entry strategies for an outside innovator under duopoly. Italian Economic Journal, 4(1), 135–152. https://doi.org/10.1007/s40797-017-0048-0

Hattori, M., & Tanaka, Y. (2021). License and entry strategies for an outside innovator in Stackelberg duopoly with royalty and fixed-fee under vertical differentiation. International Journal of Economic Theory, 17(3), 234–257. https://doi.org/10.1111/ijet.12219

International Organization for Standardization. (2010). Guidance on social responsibility (ISO/FDIS 26000: 2010) (E), Final Draft. Geneva.

Jeon, H. (2019). Licensing and information disclosure under asymmetric information. European Journal of Operational Research, 276(1), 314–330. https://doi.org/10.1016/j.ejor.2019.01.005

Kabiraj, T. (2005). Technology transfer in a Stackelberg structure: Licensing contracts and welfare. The Manchester School, 73(1), 1–28. https://doi.org/10.1111/j.1467-9957.2005.00421.x

Kim, S. L., & Lee, S. H. (2014). Eco-technology licensing under emission tax: Royalty vs. Fixed-fee. Korean Economic Review, 30(2), 273–300.

Kim, S. L., Lee, S. H., & Matsumura, T. (2018). Eco-technology licensing by a foreign innovator and privatization policy in a polluting mixed duopoly. Asia-Pacific Journal of Accounting & Economics, 25(3–4), 433–448. https://doi.org/10.1080/16081625.2017.1339617

Kliestik, T., Nica, E., Musa, H., Poliak, M., & Mihai, E. A. (2020). Networked, smart, and responsive devices in Industry 4.0 manufacturing systems. Economics, Management, and Financial Markets, 15(3), 23–29. https://doi.org/10.22381/EMFM15320203

Kovacova, M., & Lazaroiu, G. (2021). Sustainable organizational performance, cyber-physical production networks, and deep learning-assisted smart process planning in industry 4.0-based manufacturing systems. Economics, Management, and Financial Markets, 16(3), 41–54.

Kovacova, M., & Lewis, E. (2021). Smart factory performance, cognitive automation, and industrial big data analytics in sustainable manufacturing internet of things. Journal of Self-Governance and Management Economics, 9(3), 9–21. https://doi.org/10.22381/jsme9320211

KPMG. (2015). The KPMG survey of corporate responsibility reporting 2015. KPMG International. Zurich, Switzerland.

KPMG. (2016). The KPMG survey of corporate responsibility reporting 2016. KPMG International. Zurich, Switzerland.

KPMG. (2017). The KPMG survey of corporate responsibility reporting 2017. KPMG International. Zurich, Switzerland.

Lambertini, L., & Tampieri, A. (2015). Incentives, performance and desirability of socially responsible firms in a Cournot oligopoly. Economic Modelling, 50, 40–48. https://doi.org/10.1016/j.econmod.2015.05.016

Lazaroiu, G., Kliestik, T., & Novak, A. (2021). Internet of things smart devices, industrial artificial intelligence, and real-time sensor networks in sustainable cyber-physical production systems. Journal of Self-Governance and Management Economics, 9(1), 20–30. https://doi.org/10.22381/jsme9120212

Li, C., & Song, J. (2009). Technology licensing in a vertically differentiated duopoly. Japan and the World Economy, 21(2), 183–190. https://doi.org/10.1016/j.japwor.2008.04.002

Li, C., & Wang, J. (2010). Licensing a vertical product innovation. Economic Record, 86(275), 517–527. https://doi.org/10.1111/j.1475-4932.2010.00630.x

Li, D. (2021). Optimal licensing strategy of green technology in a mixed oligopoly: Fixed-fee versus royalty. Managerial and Decision Economics, 42(4), 942–951. https://doi.org/10.1002/mde.3283

Lioui, A., & Sharma, Z. (2012). Environmental corporate social responsibility and financial performance: Disentangling direct and indirect effects. Ecological Economics, 78, 100–111. https://doi.org/10.1016/j.ecolecon.2012.04.004

Liu, C. C., Wang, L. F., & Lee, S. H. (2015). Strategic environmental corporate social responsibility in a differentiated duopoly market. Economics Letters, 129, 108–111. https://doi.org/10.1016/j.econlet.2015.02.027

Lu, J., Ren, L., Zhang, Ch., Qiao, J., Kováčová, M., & Streimikis, J. (2020). Assessment of corporate social responsibility and its impacts on corporate reputation of companies in selected Balkan countries former Yugoslavia states. Technological and Economic Development of Economy, 26(2), 504–524. https://doi.org/10.3846/tede.2020.12069

Malkawi, E., & Khayrullina, M. (2021). Digital human skills from the corporate economy and business development. Ekonomicko-manazerske spektrum, 15(1), 64–74. https://doi.org/10.26552/ems.2021.1.64-74

Marakova, V., Wolak-Tuzimek, A., & Tučková, Z. (2021). Corporate social responsibility as a source of competitive advantage in large enterprises. Journal of Competitiveness, 13(1), 113–128. https://doi.org/10.7441/joc.2021.01.07

Martín-Herrán, G., & Rubio, S. J. (2018). Second-best taxation for a polluting monopoly with abatement investment. Energy Economics, 73, 178–193. https://doi.org/10.1016/j.eneco.2018.05.019

Niu, S. (2018). Price and quantity competition in an asymmetric duopoly with licensing. Journal of Public Economic Theory, 20(6), 896–913. https://doi.org/10.1111/jpet.12332

Noci, G., & Verganti, R. (1999). Managing “green” product innovation in small firms. R&D Management, 29(1), 3–15. https://doi.org/10.1111/1467-9310.00112

Ouchida, Y. (2019). Cooperative choice of corporate social responsibility in a bilateral monopoly model. Applied Economics Letters, 26(10), 799–806. https://doi.org/10.1080/13504851.2018.1497843

Ouchida, Y., & Goto, D. (2016). Cournot duopoly and environmental R&D under regulator’s precommitment to an emissions tax. Applied Economics Letters, 23(5), 324–331. https://doi.org/10.1080/13504851.2015.1073831

Petrakis, E., & Xepapadeas, A. P. (1998). Does government precommitment promote environmental innovation? (Nota di Lavoro, No. 88.1998). Fondazione Eni Enrico Mattei (FEEM), Milano.

Porter, M. E., & Kramer, M. R. (2006). Strategy and society: The link between corporate social responsibility and competitive advantage. Harvard Business Review, 84(12), 78–92.

Porter, M. E., & Kramer, M. R. (2011). Creating shared value. Harvard Business Review, 89, 62–77.

Porter, M. E., & Van der Linde, C. (1995). Toward a new conception of the environment-competitiveness relationship. Journal of Economic Perspectives, 9(4), 97–118. https://doi.org/10.1257/jep.9.4.97

PricewaterhouseCoopers. (2010). CSR Trends 2010. http://admin.csrwire.com/system/report_pdfs/1189/original/CSR_TRENDS_2010.pdf

Rau, H., Budiman, S. D., Regencia, R. C., & Salas, A. D. P. (2019). A decision model for competitive remanufacturing systems considering technology licensing and product quality strategies. Journal of Cleaner Production, 239, 118011. https://doi.org/10.1016/j.jclepro.2019.118011

Reicher, Z. R. (2019). Opportunities for small and medium sized enterprises in the field of corporate social responsibility. Ekonomicko-manazerske Spektrum, 13(1), 26–37. https://doi.org/10.26552/ems.2019.1.26-37

San Martín, M., & Saracho, A. I. (2021). Revenue royalties: Comment. Journal of Economics, 132(2), 187–192. https://doi.org/10.1007/s00712-020-00721-9

Sen, D. (2005). Fee versus royalty reconsidered. Games and Economic Behavior, 53(1), 141–147. https://doi.org/10.1016/j.geb.2004.09.005

Sen, D., & Tauman, Y. (2007). General licensing schemes for a cost-reducing innovation. Games and Economic Behavior, 59(1), 163–186. https://doi.org/10.1016/j.geb.2006.07.005

Sen, N., & Bhattacharya, S. (2017). Technology licensing between rival firms in presence of asymmetric information. The B.E. Journal of Theoretical Economics, 17(1), 1–35. https://doi.org/10.1515/bejte-2015-0097

Sen, N., Kaul, S., & Biswas, R. (2021). Technology licensing under product differentiation. Journal of Economics, 134(3), 219–260. https://doi.org/10.1007/s00712-021-00750-y

Sethi, A. K., & Sethi, S. P. (1990). Flexibility in manufacturing: A survey. International Journal of Flexible Manufacturing Systems, 2(4), 289–328. https://doi.org/10.1007/BF00186471

Singh, S. K., Del Giudice, M., Chierici, R., & Graziano, D. (2020). Green innovation and environmental performance: The role of green transformational leadership and green human resource management. Technological Forecasting and Social Change, 150, 119762. https://doi.org/10.1016/j.techfore.2019.119762

Stojanovic, A., Milosevic, I., Arsic, S., Urosevic, S., & Mihaljovic, I. (2020). Corporate social responsibility as a determinant of employee loyalty and business performance. Journal of Competitiveness, 12(2), 149–166. https://doi.org/10.7441/joc.2020.02.09

Tijani, A. A., Osagie, R. O., & Afolabi, B. K. (2021). Effect of strategic alliance and partnership on the survival of MSMEs post COVID-19 pandemic. Ekonomicko-manazerske spektrum, 15(2), 126–137. https://doi.org/10.26552/ems.2021.2.126-137

Tsai, T. H., Wang, C. C., & Chiou, J. R. (2016). Can privatization be a catalyst for environmental R&D and result in a cleaner environment? Resource and Energy Economics, 43, 1–13. https://doi.org/10.1016/j.reseneeco.2015.10.002

Wang, X. H. (1998). Fee versus royalty licensing in a Cournot duopoly model. Economics Letters, 60(1), 55–62. https://doi.org/10.1016/S0165-1765(98)00092-5

Wang, X. H. (2002). Fee versus royalty licensing in a differentiated Cournot duopoly. Journal of Economics and Business, 54(2), 253–266. https://doi.org/10.1016/S0148-6195(01)00065-0

Wang, X. H., & Yang, B. Z. (1999). On licensing under Bertrand competition. Australian Economic Papers, 38(2), 106–119. https://doi.org/10.1111/1467-8454.00045

Xia, H., Fan, T., & Chang, X. (2019). Emission reduction technology licensing and diffusion under command-and-control regulation. Environmental and Resource Economics, 72(2), 477–500. https://doi.org/10.1007/s10640-017-0201-0

Xing, M. Q., Tan, T. T., & Wang, W. (2021). Emission taxes and environmental R&D risk choices in a duopoly market. Economic Modelling, 101, 105530. https://doi.org/10.1016/j.econmod.2021.105530

Ye, G., & Mukhopadhyay, S. K. (2013). Role of demand-side strategy in quality competition. International Journal of Production Economics, 145(2), 696–701. https://doi.org/10.1016/j.ijpe.2013.05.024

Yong, S. K., Friesen, L., & McDonald, S. (2018). Emission taxes, clean technology cooperation, and product market collusion: Experimental evidence. Economic Inquiry, 56(4), 1950–1979. https://doi.org/10.1111/ecin.12573

Zhang, H., Wang, X., Hong, X., & Lu, Q. (2018). Technology licensing in a network product market: Fixed‐fee versus royalty licensing. Economic Record, 94(305), 168–185. https://doi.org/10.1111/1475-4932.12385

Zhang, X., Chen, T., & Shen, C. (2020). Green investment choice in a duopoly market with quality competition. Journal of Cleaner Production, 276, 124032. https://doi.org/10.1016/j.jclepro.2020.124032

Zhao, D., Chen, H., Hong, X., & Liu, J. (2014). Technology licensing contracts with network effects. International Journal of Production Economics, 158, 136–144. https://doi.org/10.1016/j.ijpe.2014.07.023

Zou, Y., & Chen, T. L. (2020). Quality differentiation and product innovation licensing. Economic Modelling, 87, 372–382. https://doi.org/10.1016/j.econmod.2019.08.010