According to Internalization Theory, One of the Drawbacks of Licensing

question 5

Multiple Choice

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.

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Definitions:

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