A disadvantage of a short-term contract as an alternative on the make-or-buy continuum is that: B. the supplying firm has little reason to perform transaction-specific investments.
A short-term contract can be defined as a fixed term contractual agreement between two or more parties that has a definite duration of not more than one year or 24 months.
Hence, a short-term contract is characterized by a specific and limited amount of time.
A make-or-buy continuum can be defined as an act of making a strategic choice between manufacturing (making) a product internally (in-house) or buying the product from an external supplier.
Basically, one of the disadvantages of using a short-term contract as an alternative to the make-or-buy continuum is that, the supplying firm has little or no reason to perform transaction-specific investments i.e a non-transferable investment that has a unique utility.
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