A firm is noticing that 10% of its freelance contacts are not being completed on

Question

A firm is noticing that 10% of its freelance contacts are not being completed on time. They suspect this is because there are no consequences for lateness for the freelancers, but it costs the firm money. The firm decides to implement a penalty for lateness, and guidelines for dealing with contract violations. The firm is:

D. attempting to reduce transaction costs through institutional frameworks.

Esca Motors is aware that the brake wires used in its cars are of poor quality. Yet, it refuses to take any action and proceeds to produce and sell the cars. The family of a victim who lost his life due to a brake failure in the middle of a highway sues the company. Esca Motors is pressurized by Congress to recall its cars and compensate the victims with money. Esca Motors gives in to the pressure and does what is necessary. This is an example of _____.

Explanation / Answer

1. D. Attempting to reduce transaction costs through the institutional frameworks...........they are basically trying to reduce the liability which may arise from the lateness

2. B Accommodative Strategy............since the firm has to take the responsibility and resolve the issue which has been originated due to the practices of firm itself

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