The case of the Kodak - IBM outsourcing agreement for payroll software indicates that ________ can cause significant long-term holdup problems.
A) Competitive markets
B) Technological change
C) Specific assets
D) Quality control issues

Question

Quizplus · Accepted Answer

The case highlights the issue of specific assets, which refers to assets that are highly specialized and often customized to a particular firm or situation. In this case, IBM had developed a payroll software specifically for Kodak, and Kodak became dependent on this software over time. However, when Kodak tried to switch to a new vendor, they faced significant challenges due to the specific nature of the software and the difficulty of finding another vendor who could provide a similar solution. This highlights the potential for holdup problems when firms become too dependent on specific assets provided by a single vendor.

The Case of the Kodak - IBM Outsourcing Agreement for Payroll