Reaching for the society: The commercialization effects of NASA technology licensing

How does technology transfer of government inventions affect follow-on innovation? Recognizing the importance of technology development and commercialization, the United States enacted several policies in the 1980s aimed at promoting the commercialization of government-funded research through licensing. However, it remains debated whether patenting and licensing effectively stimulate welfare-enhancing follow-on innovation. To address this question, we leverage technology data from NASA’s Technology Transfer Program, which facilitates licensing of NASA inventions to third parties, and combine it with United States patent data. Our analysis shows that exclusive licensing announcements are associated with increases in subsequent technological developments. These follow-on innovations originate from diverse entities and locations and span various technology fields, indicating substantial knowledge spillovers. Consequently, our findings suggest that commercialization via licensing of government inventions represents a policy instrument for increasing societal benefits.