A drawback for a firm engaging in a short-term contract is:
A) It usually takes at least a year for processes between organizations to get in sync.
B) The supplying firm has no incentive to make additional transaction-specific investments to increase performance or quality.
C) There is no competitive bidding process with short-term contracts.
D) Short-term contracts offer less planning opportunity than individual market transactions.

Question

Quizplus · Accepted Answer

A drawback for a firm engaging in short-term contracts is that there is little incentive for the supplying firm to make additional transaction-specific investments.

A Drawback for a Firm Engaging in a Short-Term Contract