Which of the following is an outside incentive that forces managers to put forth maximal effort?
A) Revenue-sharing contracts
B) Performance bonuses
C) Threat of takeovers
D) Flat fees

Question

Quizplus · Accepted Answer

The threat of takeovers is an outside incentive that forces managers to put forth maximal effort. This is because if the company is not performing up to standards, it becomes vulnerable to being taken over by another company. This threat forces managers to work harder to improve the company's performance and avoid being taken over. Revenue-sharing contracts and performance bonuses are internal incentives provided by the company to motivate managers to perform better, and flat fees do not serve as an incentive for managers to put forth maximal effort.

Which of the Following Is an Outside Incentive That Forces