High uncertainty in competitive markets
A) increases the number of alliances because uncertainty leads to synergy.
B) erodes alliances because uncertainty motivates opportunistic behaviors by alliance partners.
C) encourages firms to form alliances to share risks.
D) makes alliances among firms less attractive because the markets' profits are meager.

Question

Quizplus · Accepted Answer

In highly uncertain markets, firms are more likely to form alliances to share risks. This is because uncertainty makes it difficult for firms to predict future market conditions and potential outcomes, and sharing risks through alliances can help mitigate the negative impact of potential losses.

High Uncertainty in Competitive Markets