Which of the following reflects internalization theory?
A. Licensing gives a firm the tight control over manufacturing, marketing, and strategy in a foreign country that may be required to maximize its profitability.
B. Licensing may result in a firm's giving away valuable technological know-how to a potential foreign competitor.
C. Licensing has no major drawbacks as a strategy for exploiting foreign market opportunities.
D. A problem with licensing arises when the firm's competitive advantage is based much on its products rather than on the management, marketing, and manufacturing capabilities that produce those products.
E. Licensing is more profitable than FDI.
Answer: B. Licensing may result in a firm's giving away valuable technological know-how to a potential foreign competitor