This paper searches for evidence on the impact of a number of contextual and internal
factors on firms’ decisions to purchase a technological license. In particular, we focus
on competitive pressure, selling directly to consumers, and beginning operations as an
informal firm. To do so, we analyze 2006 cross-sectional data from the Latin American
wave of the World Bank’s Enterprise Survey, which includes fourteen countries in the
sample. Regarding the relationship between competitive pressure and innovation, we find
that the effect on licensing decreases with the intensity of competitive pressure. We also
inquire into whether firm characteristics have an impact on licensing behavior. We find
that firms that sell directly to consumers and firms that began operations as informal
firms are less likely to purchase technological licenses. We discuss potential implications
of the empirical findings for the design of policies and business strategies.