Part 4/6:
Bounded Rationality: This concept suggests that the rationality of decision-makers is limited by the information they possess, their ability to process that information, and the time they have to analyze it. These limitations can influence how well directors understand the business environment and make decisions.
Opportunism: This term refers to the tendency of individuals to prioritize their own interests over those of the organization. The prevalence of opportunistic behavior can significantly impact transaction costs, particularly in negotiations and contract enforcement.