What happens when the process by which governance develops exhibits path dependence?
A)Governance arrangements split decision rights and controls between two related firms
B)Governance arrangements are optimal
C)Past circumstances could exclude certain possible governance arrangements in the future
D)The firm will split into two entities to reduce the governance issues created
E)The governance will form effectively

Question

Quizplus · Accepted Answer

Path dependence occurs when past circumstances shape the possible choices available in the future. Therefore, certain possible governance arrangements may be excluded because of the historical path that has been followed. Options A, B, D, and E are not related to the concept of path dependence in governance development.

What Happens When the Process by Which Governance Develops Exhibits