Affiliate and non-affiliate intellectual property transactions in international business: an empirical overview of the UK and USA

This study investigates the pattern and growth of affiliate and non-affiliate international transactions in intellectual property (IP) for the USA and the UK. Using official data, it explores how far and in what ways the patterns of licensing and franchising activity accord with theoretical expectations. We find significant differences in the pattern of non-affiliate and affiliate transactions by country and region. While these can directly be linked to the extent of foreign direct investment (FDI) by the investing countries, it is also evident that the policy regime developments of the host countries, as well as the international (and regional) regime, have a bearing on the method by which intellectual property is exploited. Leading these are the degree of limitation in host market size, the degree of fragmentation of markets on a regional basis and, possibly, the excess transaction costs imposed on FDI by cultural and institutional barriers in certain countries.