The relationship between higher levels of vertical integration and an increase in bureaucratic costs has been noted in the extant academic literature. Some firms have cast the decision to _____________ versus the decision to externally source as a comparison between the costs of bureaucracy and the cost of _____________.

Question

Quizplus · Accepted Answer

The correct answer is A) vertically integrate / external coordination. This is because the relationship discussed pertains to the choice between increasing vertical integration, which involves incorporating more stages of production or distribution within the firm (thus potentially increasing bureaucratic costs), and sourcing externally, which involves coordinating with outside firms or suppliers (thus incurring costs related to external coordination).

The Relationship Between Higher Levels of Vertical Integration and an Increase