Which of the Following Is a Major Drawback of Using

Multiple Choice

Which of the following is a major drawback of using Knickerbocker's theory in explaining FDI?

A) It ignores the fact that firms invest in a foreign country when demand in that country will support local production.
B) It does not explain why the first firm in an oligopoly decides to undertake FDI rather than to export or license.
C) It fails to identify when it is profitable to invest abroad.
D) It ignores the fact that licensing as an entry strategy has its limitations.