Which theory explains why a firm would choose to enter a foreign market via FDI rather than exploit its ownership advantages internationally through other means?
A) eclectic theory
B) internalization theory
C) relative factor endowments
D) national competitive advantage

Question

Quizplus · Accepted Answer

Internalization theory suggests that a firm may choose to enter a foreign market via FDI rather than other means (such as licensing or exporting) in order to internalize and protect the firm's ownership advantages and capabilities from competitors. This can provide the firm with greater control and flexibility in the foreign market. The other options listed do not specifically address this explanation.

Which Theory Explains Why a Firm Would Choose to Enter