________ suggest that FDI will be more likely to occur when transaction costs with a second firm are high.
A) Eclectic theory
B) Internalization theory
C) Ownership advantage theory
D) National competitive advantage

Question

Quizplus · Accepted Answer

Internalization theory suggests that firms will prefer foreign direct investment over licensing or exporting when transaction costs of dealing with another firm are high. This is because internalizing the transaction can avoid these costs.

________ Suggest That FDI Will Be More Likely to Occur