Abstract
This paper focuses on the conditions under which an international firm would expand overseas via the transfer of technology and rights to its own controlled equity affiliates, as opposed to resorting to the “market” by selling its technology to independent foreign licensees. The relative propensity of U.S. firms to use licensing versus equity investment is then examined statistically in regression models using data of the Department of Commerce. A second paper in this series (forthcoming in the Summer 1985 issue) will examine strategic and negotiation issues involved in combining equity investment, licensing and intra-firm trade into one agreement.
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*Farok Contractor is Associate Professor at the Graduate School of Management, Rutgers University. He has been an executive in an Asian firm where he helped negotiate joint ventures and licensing agreements. His research has been concentrated mainly in the areas of joint ventures and licensing agreements, and he has published more than a dozen scholarly articles in these fields He is author of International Technology Licensing: Compensation, Costs and Negotiation (Lexington Books, 1981) and Licensing in International Strategy: A Guide for Planning and Negotiation (Quorum Books, Greenwood Press, forthcoming 1985).
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Contractor, F. Choosing Between Direct Investment and Licensing: Theoretical Considerations and Empirical Tests. J Int Bus Stud 15, 167–188 (1984). https://doi.org/10.1057/palgrave.jibs.8490501
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DOI: https://doi.org/10.1057/palgrave.jibs.8490501