The argument that firms prefer FDI over licensing to retain control over know-how,manufacturing,marketing,and strategy or because some firm capabilities are not amenable to licensing constitutes the _____.
A)comparative advantage theory
B)distribution theory
C)new trade theory
D)internalization theory

Question

Quizplus · Accepted Answer

A branch of economic theory known as internalization theory seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets (this approach is also known as the market imperfections approach).It argues that firms prefer FDI over licensing to retain control over know-how,manufacturing,marketing,and strategy or because some firm capabilities are not amenable to licensing.

The Argument That Firms Prefer FDI Over Licensing to Retain