Question

Firms prefer FDI to licensing because FDI_____.

a. protects the firm from economic agglomeration
b. provides the firm with direct ownership to its foreign assets
c. requires complete dissemination of technological know-how to host nation entity
d. increases the chances of opportunism when dealing with a host nation entity

Answer 1

B) provides the firm with direct ownership to its foreign assets

Step-by-step explanation:

When a multinational enterprise (MNE) is considering investing in foreign country they usually decide to do it through foreign direct investment (FDI). They do this because FDI ensures that the MNE is the direct owner of the assets and can freely decide what to do with them.