Contractual Implications of International Trade in Tacit Knowledge

Abstract

This paper 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 by Spanish firms in 1991 is analyzed 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 behavior on the licensor’s side.