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Another study, also based on information from the SDC database on strategic alliances but using more recent data (1985-2002) finds similar results and identifies several factors that affect positively the likelihood of firms to engage in licensing agreements (Vonortas and Kim, 2004).
Companies will tend to engage in licensing agreements : the closer their technological profiles; the closer their market profiles; the more familiar they are with each other through prior agreements; the higher their prior independent experience with licensing; and the stronger the intellectual property protection in the primary line of business of the licensor.

All these factors affect licensing transaction costs and indicate that reducing transaction cost may be more important when licensing occurs across sectors, whereas strategic and competition - related factors may be more important when licensing occurs between firms relating to the same industry.

Global Pattern of Patent Licensing

Available information suggests that markets for technology are large and growing. In the United states, it has been estimated that patent licensing revenues rose from USD 15 billion in 1990 to more than USD 100 billion in 1998, and experts estimated that revenue could top half-trillion dollars annually by the middle of the next decade (Rivette and Kline, 2000). A Japanese survey indicates that inward licensing increased from JPY 230 billion in 1994 to JPY 360 billion in 2001, while outward licensing jumped from JPY 170 billion in 1994 to JPY 420 billion in 2002 (Motohashi, 2005).

Another conservative estimate indicates that total Worldwide licensing transactions (including domestic and international transactions) averaged more than USD 36 billion a year between 1990 and 1997 - considerably higher than the estimated average of USD 5.6 billion in the 1980s (Arora et.al. 2001). This estimate includes the value of licensing and royalty payments, equity investments and R&D funding provided in return for licensing rights.

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* Contributed by: -
Prof. (Dr.) R.P.Verma,
MASD (USA), MRES (London),
Ex. H.O.D & Dean,
Faculty of Commerce,
Ranchi University, Ranchi,
Dr. Arabinda Bhandari, MBA, Ph.D.
(Strategic Management)