_______________,a branch of economics,seeks to explain why firms often prefer foreign direct investment to licensing as a strategy for entering foreign markets.
A) Comparative advantage theory
B) Globalization theory
C) Cosmopolitan theory
D) Internalization theory
E) Patterns of FDI

Question

Quizplus · Accepted Answer

Internalization theory explains why firms tend to prefer foreign direct investment (FDI) to licensing as a strategy for entering foreign markets. This theory suggests that firms prefer FDI because it allows them to have greater control over their operations in the foreign market and to protect their technology and other proprietary assets. FDI also allows firms to better coordinate their activities across borders and to take advantage of economies of scale and scope that may not be available through licensing.

_______________,A Branch of Economics,seeks to Explain Why Firms Often Prefer