When the benefits of internalization outweigh its costs,________________________ occurs.

Question

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Foreign direct investment involves setting up operations in a foreign country, which allows the firm to have greater control over its operations and intellectual property. This level of internalization may be necessary when the benefits of internalization (such as maintaining quality control and protecting intellectual property) outweigh the costs (such as cultural differences and government regulations). Licensing, franchising, and contract manufacturing may not provide as much control or protection, which can result in higher costs or risks.

When the Benefits of Internalization Outweigh Its Costs,________________________ Occurs