Complete question:
The argument that firms prefer FDI over licensing to retain control over know-how, manufacturing, marketing, and strategy or because some firm capabilities are not amenable to licensing constitutes the
A. comparative advantage theory.
B. distribution theory.
C. new trade theory.
D. internalisation theory.
E. licensing theory.
Answer:
The argument that firms prefer FDI over licensing to retain control over know-how, manufacturing, marketing, and strategy or because some firm capabilities are not amenable to licensing constitutes the Internalisation theory
Step-by-step explanation:
The philosophy of internalization focuses on intermediate commodity demand imperfections.
There are two main categories of intermediate products: information flows between research and development (R&D) and manufacturing, as well as flows from upstream and downstream production facilities of parts and raw materials.
Most theory implementations rely on the flow of information. Having limited intellectual property rights including patents and trademarks makes correct information easier to adapt.