3. Firms often prefer FDI to licensing when (a) a firm has valuable know-how that cannot be...

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3. Firms often prefer FDI to licensing when

(a) a firm has valuable know-how that cannot be adequately protected by a licensing contract,

(b) a firm needs tight control over a foreign entity in order to maximize its market share and earnings in that country, and

(c) a firm’s skills and capabilities are not amenable to licensing.

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