The Role of Technology Licensing in the International Business Operations of UK Multinationals

Campbell, Kevin (1990) The Role of Technology Licensing in the International Business Operations of UK Multinationals. PhD thesis, University of Glasgow.

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This thesis explores the nature of the international licensing activities of UK-based multinational companies (MNCs). It is concerned with the outward licensing of technology, in the form of patents and know-how, and it assesses the relative importance of a number of variables that motivate MNCs to license their technology to overseas companies rather than to use the more common methods of international business, foreign direct investment (FDI) and exporting. The thesis analyses the extent of international licensing activity among UK-based MNCs, and its significance in relation to the other two major international business methods. It also describes the characteristics of the technology licensed and of the MNCs involved in licensing, and tests a number of hypotheses about these characteristics that are drawn from a variety of sources in the literatures on the the MNC, FDI, international licensing, technology transfer and transaction cost theory. The research is broadly deductive in nature as it assesses the validity of various explanations found in the above literatures. Most of the data was collected by means of a mailed questionnaire directed at a carefully selected survey population of 322 UK-based MNCs in 1984, from which 86 useable responses were received. The statistical analysis utilises mainly non-parametric procedures as most of the data is of an ordinal nature, although parametric procedures are also used. The analysis of government statistics on FDI, exports and royalties over the period 1964 to 1984 revealed that the proportions of the UK's total foreign sales which arose from licensing were consistently lower than those which arose from FDI and exports, but were nevertheless sufficiently large (6.7% in 1984) to merit serious attention. The analysis of the determinants of the licensing decision using the questionnaire survey data revealed that licensing was viewed by the vast majority of UK MNCs as a 'strategic' decision, in the sense that it was more often than not evaluated against FDI and exporting. Government-created market imperfections were found to be important reasons behind the decision to opt for licensing at the expense of FDI or exporting. The intercorrelations between the variables listed in the questionnaire were subjected to factor analysis to determine whether a smaller group of key factors could be used to account for the decision of UK MNCs to adopt licensing, and this exercise was successful in isolating a number of such factors. The technique of multiple linear regression analysis was also employed to determine the extent to which nine key corporate characteristics were associated with the level of licensing activity of the sample of UK MNCs. The intellectual property content of the licensing agreements possessed by the sample were analysed using standard nonparametric tests to determine if their characteristics differed according to whether the agreements were with unrelated or related overseas companies. It was anticipated that differences would exist due to the greater transaction costs that are assumed to arise in unrelated agreements. The results were generally consistent with expectations. In summary, the key contributions to knowledge made by this study are as follows: firstly, it provides evidence that the licensing decision is not simply a by-product of the FDI and exporting decisions but is often a first-best choice; secondly, it provides insights into the factors which influence the licensing decision and their relative weightings; and, thirdly, it produces evidence which is broadly supportive of the transaction cost school of thought through its examination of the intellectual property characteristics of licensing agreements.

Item Type: Thesis (PhD)
Qualification Level: Doctoral
Keywords: Management, Operations research, Information technology
Date of Award: 1990
Depositing User: Enlighten Team
Unique ID: glathesis:1990-78157
Copyright: Copyright of this thesis is held by the author.
Date Deposited: 28 Feb 2020 12:09
Last Modified: 28 Feb 2020 12:09

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