According to internalization theory, one of the drawbacks of licensing is that
A) it may result in a firm's technological know-how being restricted to a limited knowledge base and stifles any future development.
B) it does not give a firm the tight control over manufacturing, marketing, and strategy in a foreign country that may be required to maximize its profitability.
C) when a firm allows another enterprise to produce its products under license, the licensee bears the costs or risks.
D) its use is restricted by the government through the imposition of tariffs and quotas.
E) it is less cost-effective than FDI.

Question

Quizplus · Accepted Answer

Licensing does not provide a firm with the tight control over manufacturing, marketing, and strategy in a foreign country, which may be necessary to maximize profitability.

According to Internalization Theory, One of the Drawbacks of Licensing