Which of the following can reduce the incentive of business partners to hold up a company when the company has made relationship-specific investments?
A)The greater the level of relationship-specific investments, the lower the incentive for the partners to hold-up.
B)The more the company relies on the business partner, the lower the incentive for the partners to hold-up.
C)A high level of market power is held by the business partners.
D)A long-term relationship based on trust exists between the partners and the company.

Question

Quizplus · Accepted Answer

A long-term relationship based on trust can reduce the incentive of business partners to hold up a company when the company has made relationship-specific investments. This is because trust can act as a deterrent against opportunistic behavior and encourage cooperation and mutual benefits. The other options may not necessarily reduce the incentive of business partners to hold up a company in the presence of relationship-specific investments.

Which of the Following Can Reduce the Incentive of Business