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Proprietary Technology June 20, Proprietary Technology Introduction Proprietary technology is one of the advantages that a firm has as compared to foreign competitors. This technology if used in different ways can be an advantage or a disadvantage to the owners. The goal of this paper, discusses whether licensing of proprietary technology to overseas competitors is the best means to give up a firm’s competitive advantage.Licensing of proprietary technology involves giving away, for a fee, a process, tool, system or similar tools known to be the property of a company, and that provides benefits or advantages to the owner.

In licensing this technology to foreign firms, the licensing firm stands a chance to lose the technology to the competitor (Wuhan University of technology, Para. 2). This is in the form of the competitor developing the technology beyond the level that it was originally. Proprietary technology is known to give an edge to the owner by denying competitors of the benefits it has to offer. Proprietary technologies owners use them as a source of revenue by controlling the market prices of their products, as well as those of their competitors (Economides & Katsamakas, 2006, Para. 1058). In such cases, the technology is used as a benchmark for market prices, and licensing it would, therefore, be a demerit to the owner.

At the same time, licensing would be a good opportunity for the owners to up their performance by increasing the level of competition. With competition, they can provide better products and services to consumers (Business Wire, Para. 3). The advantage is, therefore, not lost in any way. Instead, it throws the competitors off balance due to the possibility that the technology owners may have better deals. Licensing proprietary technology is an outright loss of competitive advantage to the owners as a result of creating an alternative source of technology to consumers.

This is because; licensing makes the technology open source. According to studies, proprietary technology tends to dominate the market while open source is always a runners up thus it should be avoided at all cost (Economides & Katsamakas, 2006, p. 1059).In conclusion, licensing proprietary technology can work both ways for a firm, advantage and disadvantage. It should, therefore, be used as a firm sees fit depending on the intended outcomes. ReferencesEconomides, N., & Katsamakas, E. (2006).

Two-Sided Competition of Proprietary vs. Open Source Technology Platforms and the Implications for the Software Industry. Management Science, 52(7), 1057-1071.Business Wire. (March 29, 2012) Amkor Technology Licenses Proprietary Through Mold Via Technology to SHINKO.  Open Source Magazine.Wuhan University of Technology (2011). Critical Discussion Questions and Answers. Retrieved on June 20, 2012 from http://test.edusjw.com/qygl/Article.asp?ID=96