When an organization relies on a small number of trading partners:
A) bounded rationality decreases.
B) bounded rationality increases.
C) the risk of opportunism increases.
D) the risk in investing in specific assets decreases.

Question

Quizplus · Accepted Answer

When an organization relies on a small number of trading partners, the risk of opportunism increases. This is because the organization becomes more vulnerable to the actions of these partners, who may take advantage of their leverage to engage in opportunistic behaviors such as charging higher prices or providing lower quality goods or services. This can lead to higher costs for the organization and damage to its reputation. Therefore, it is important for the organization to be aware of this risk and take proactive steps to mitigate it, such as developing contingency plans or diversifying its supplier base.

When an Organization Relies on a Small Number of Trading