Coordination contracts in the university technology transfer chain

Successful university technology transfer requires close cooperation between the inventor and the firm. However, occasionally, this cooperation is not self-conscious for both the inventor and the firm. In this paper, we develop a game model by introducing the concept of the university technology transfer chain. We examine the inventor’s and firm’s inputs and payoffs in case of both the decentralised and centralised decision-making modes. Based on the principal-agent theory, we find that the commonly used license contract with royalties or equity payment cannot help effectively reduce the double moral hazard of both the inventor and the firm, and the portfolio contract only works effectively because of the limitation of transfer factor. The side-payment self-enforcing contract could coordinate the matched inputs to achieve maximum social welfare. We also test these findings through numerical investigation. Lastly, we present new insights for universities and firms as well as implications for policymakers.