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: (A) increasing opportunism. (B) focusing on values and beliefs rather than laws and regulations. (C) expanding the range of acceptable actions that firms can take. (D) attempting to reduce transaction costs through institutional frameworks.

Question

Hollyn

Business

14 August, 09:32

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: (A) increasing opportunism. (B) focusing on values and beliefs rather than laws and regulations. (C) expanding the range of acceptable actions that firms can take. (D) attempting to reduce transaction costs through institutional frameworks.

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Jessie Campbell · Answer 1

Answer: (D) attempting to reduce transaction costs through institutional frameworks.

Explanation: Institutional frameworks are a system of formal rules, guidelines and regulations put in place by organizations in order to effectively regulate the activities or actions of individuals within or outside the Organisation.

It can also involve the sets of informal rules which includes customs, norms and traditional actions put in place to enhance or improve the efficiency of Organisation, which can include the reduction of Costs, increase in overall output and revenue etc.