Information technology, especially the use of networks, can help firms lower the cost of ________, making it worthwhile for firms to contract with external suppliers instead of using internal sources.

Because this way the firm size can stay constant or contract even if the company increases its revenues. Information technology helps firms contract in size because it can reduce transactions costs. According to the transaction cost theory, firms and individuals seek to economize on transaction costs, much as they do on prodcution costs. For instance, by using computer links to external suppliers, the Chrylser Corporation can achieve economies by obtaining more than 70 percent of its parts from other companies.

Information​ technology, especially the use of​ networks, can help firms lower the cost of​ ________, making it worthwhile for firms to contract with external suppliers instead of using internal sources.

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Information technology, especially the use of networks, can help firms lower the cost of ________, making it worthwhile for firms to contract with external suppliers instead of using internal sources.