Final answer:
The technique of referencing earlier works in literature is known as an allusion, which distinguishes from parody, plagiarism, or invention. Proper citation methods like quoting, paraphrasing, and summarizing help avoid plagiarism.
Step-by-step explanation:
The technique of writers borrowing or referencing from earlier works is called allusion.
An allusion is a figure of speech that refers to a well-known story, event, person, or object in order to make a comparison in the readers' minds.
For example, if a book references Shakespeare's plays or Greek mythology, those are considered allusions.
Contrastingly, a parody involves imitation with exaggeration for comic effect, plagiarism is the unauthorized use or close imitation of another author's work without providing proper credit, and invention refers to creating something new.
When incorporating information from sources, it's crucial to avoid plagiarism by using proper citation methods such as quotation, paraphrase, and summary, always accompanied by appropriate referencing.