Question

_______________ is an explanation of the process by which firms acquire and retain one or more value-chain activities inside the firm, minimizing the disadvantages of dealing with external partners and allowing for greater control over foreign operations.

Answer 1

Internalization theory

Step-by-step explanation:

Developed in 1976 by Buckley and Cassom and Rugman in 1979, the theory of internalization is premised on the assumption that companies perform the operating processes performed by the market less efficiently internally, that is, each company has a set of specific factors that assist in gaining competitiveness.

The process of corporate internationalization occurs when the company internationalizes its operations across borders.

There are two fundamental principles that underpin the theory of internalization:

1. The benefits of market internalization must outweigh the costs.
2. The transaction costs of internalization operations should be higher than the costs of their organizational integration.