Licensing agreements in Lebanon. (c1995)

Abstract

Licensing is a multinational vehicle that brings together companies that have common business interests but each one on its own lacks some resources to realize their plans. Because licensing is a low investment, low risk mode of entry with low political, foreign exchange and business risks, it is seen as the preferred from of market entry, particularly into developing countries. The main purpose of this research is to find out what motivates the Lebanese companies to get involved in licensing agreements (as licensees), how these agreements are negotiated, and who has the highest bargaining power: the licensor or the licensee? Based on the facts that were given by the sample firms, it is concluded that the main motive for a Lebanese company to get involved in licensing is to obtain the patent and the resources from the licensors (usually an MNE from a developed country). Lebanese companies prefer to be independent and, therefore, take a limited assistance from their licensors. As for the negotiation process, it is mainly done by top managers. The negotiating team is not subject to any special training, and the government does not interfere in the negotiation process of the agreement. Concerning the bargaining power, most of the companies believe that licensing is a mutual agreement where each party has equal opportunities. Nevertheless, this research shows that in Lebanon, the bargaining power of the licensor is higher than that of the licensee. Finally, the current research recommends Lebanese companies to begin to think in terms of long-run objectives and plans in order to be able to survive in today's complex and competitive business environment.