According to Knickerbocker's Theory

question 55

Multiple Choice

According to Knickerbocker's theory

• A) when a firm has valuable know-how that cannot be adequately protected by a licensing contract, it engages in FDI.
• B) when a firm's skills and know-how are not amenable to licensing, it usually prefers the FDI route.
• C) by placing tariffs on imported goods, governments indirectly increase the cost of exporting relative to foreign direct investment and licensing.
• D) when a firm that is part of an oligopolistic industry expands into a foreign market, other firms in the industry will be compelled to make similar investments.

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Definitions:

Tangible Assets

Tangible assets are physical assets that have a finite monetary value and physical presence, such as machinery, buildings, and land.

Retained Earnings

Retained earnings are the portion of a company's profits that is kept or retained and not paid out as dividends to shareholders but reinvested in its core business or to pay debt.

Shareholders'

Individuals or entities that own one or more shares of stock in a public or private corporation, granting them certain rights such as voting on corporate matters.

Reinvested Profit

Earnings that a company plows back into itself to fund growth, debt repayment, or asset purchases rather than distributing to shareholders as dividends.