The Driving Force Behind the Recent Outsourcing of Service Activities

question 29

True/False

The driving force behind the recent outsourcing of service activities such as IT,HR,and logistics is that many firms,which used to view certain activities as a very special part of their industries,now believe that these activities have relatively generic attributes that can be shared across industries.

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Definitions:

Government Failure

A situation where government intervention in the economy causes inefficiencies or leads to a misallocation of resources.

Government Intervention

Actions taken by a government to affect or control various aspects of the economy, such as regulations, subsidies, tariffs, and taxes to correct market failures and promote economic stability.

Regulatory Capture

A situation where regulatory agencies are dominated by the industries they are supposed to be regulating, leading to decision making that benefits the industry at the expense of the public good.

Economic Efficiency

A situation in which it is not possible to improve overall economic welfare by reallocating resources amongst individuals, implying no waste is occurring.