Licensing proprietary technology to foreign competitors is the best
way to give up a firm?s competitive advantage.   Discuss

Clearly, licensing technology to competators can have both up and down sides.  

The up side is that your company's software likely has a need to 'talk
to' or connect with competator software for certain tasks that
customers will want to do.  You and your competator need to
collaborate to make these tasks possible to get the best use out of
both technologies.

The down side is that your competator can then produce a similar
software (or an add-on to their existing software) that could be
bought in place of your software.

Some of the downside can be avoided by doing very selective licensing.
 A company can choose to license out a very small portion of their
software that is needed to collaborate with competators.