Exciton localization phenomena are considered here to comprehend the high internal quantum efficiency in InGaN/GaN multiple-quantum-well structures having discrete quantum dots (QDs) prepared by metal-organic-chemical-vapor deposition method onc-sapphire substrates. Spectroscopic results from the variable-temperature steady-state-photoluminescence and time-resolved photoluminescence (TRPL) are investigated. While the exciton localization is enhanced by strong localized states within the InGaN/GaN QDs-the impact of free carrier recombination cannot be ignored. The observed non-exponential decay in TRPL measurements is explained using a model by meticulously including localized exciton, non-radiative and free carrier recombination rates. A new method is proposed to calculate the internal quantum efficiency, which is supplementary to the traditional approach based on temperature-dependent photoluminescence measurement.