A Multi-Task Principal-Agent Approach to Organizational Form*

Besanko, David; Régibeau, Pierre; Rockett, Katharine

doi:10.1111/j.1467-6451.2005.00265.x

Cited by 34 publications

(47 citation statements)

References 13 publications

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“…; b e i2 ) ; i = 1; : : : ; 2k; Proposition 6 is consistent with Besanko, Régibeau, and Rockett (2005) who show that cross-task asymmetries improve the relative performance of the functional structure.…”

Section: Each Project Requires 2k Taskssupporting

confidence: 75%

A Double Moral Hazard Model of Organization Design

2007

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractWe develop a theory of organization design in which the firm's structure is chosen to mitigate moral hazard problems in the selection and the implementation of projects. For a given set of projects, the "divisional structure" which gives each agent the full responsibility over a subset of projects is in general more efficient than the functional structure under which projects are implemented by teams of agents, each of whom specializes in one task. However, the ex post efficiency of the divisional structure may encourage the firm's manager to select more expensive (but still profitable) projects ex ante. We examine how the tradeoff between the ex post inefficiency in the implementation of projects and the ex ante inefficiency in the selection of projects is affected by various factors like size, complexity, and asymmetry in the importance of tasks. We also explore the desirability of adopting a narrow business strategy and the implications of managerial work overload for organizational structure.

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Section: Each Project Requires 2k Taskssupporting

confidence: 75%

A Double Moral Hazard Model of Organization Design

2007

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“…It may o¤er explicit payper-performance contracts to the agents assigned to the jobs where contractible performance measures are available and promise implicit contracts to the others. 6 The scenario described above can be readily accommodated in our basic model. However, a new e¤ect originates in the presence of the explicit contract: team accountability makes implicit incentives more fragile by enhancing the …rm's punishment payo¤.…”

Section: Introductionmentioning

confidence: 99%

“…(ii) Team accountability is optimal for all . The former is the case when 6 As we will discuss in section 4, the commercial insurance industry is a typical example of such a multitasking environment. the extent of the multitasking problem is low; the latter is the case when the multitasking problem is severe.…”

Section: Introductionmentioning

confidence: 99%

Optimal job design in the presence of implicit contracts

Mukherjee

Vasconcelos

2011

The RAND J of Economics

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Abstract. We characterize the optimal job design in a multitasking environment when the …rms rely on implicit incentive contracts (i.e., bonus payments). Two natural forms of job design are compared: (i) individual accountability, where each agent is assigned to a particular job and assumes full responsibility for its outcome; and (ii) team accountability, where a group of agents share responsibility for a job and are jointly accountable for its outcome. The key trade-o¤ is that team accountability mitigates the multitasking problem but may weaken the implicit contracts. The optimal job design follows a cut-o¤ rule: …rms with high reputation concerns opt for team accountability, whereas …rms with low reputation concerns opt for individual accountability. Team accountability is more likely the more acute the multitasking problem is. However, the cut-o¤ rule need not hold if the …rm combines implicit incentives with explicit pay-per-performance contracts.

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“…Designing optimal incentives in such a setting is complicated. The system introduced by the bank is consistent with the notion that workers with tasks that contribute to the bottom line should receive high-powered incentives, while multitaskers should not (Holmstrom and Milgrom 1991;Besanko, Regibeau and Rockett 2005).…”

Section: Introductionmentioning

confidence: 64%

“…As a result, it is difficult to judge whether the incentive system is optimal given the roles of bankers, advisors and other employees and vice versa (Besanko, Regibeau and Rockett 2005;Corts 2007). Nevertheless, the literature provides us with substantial insight into the likely impact of the reforms on branch performance.…”

Section: Related Literature and Empirical Predictionsmentioning

confidence: 99%

Incentive Pay and Performance: Insider Econometrics in a Multi-Unit Firm

Bogaard¹,

Švejnar²

2013

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. We exploit organizational reforms in a foreign-owned bank in Central-East Europe to study the implementation of modern HRM policies in an emerging market context. We have branchlevel data and use our knowledge of the process that led to the adoption of the reforms to implement two estimators that address endogeneity bias in a complementary fashion: an IV approach and Generalized Propensity Score estimation. Our results show that some of the reforms had a positive impact on productivity, but they also underscore the risks of quantitybased incentives where quality is important.JEL Classification: F23, G21, M52

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A Multi-Task Principal-Agent Approach to Organizational Form*

Cited by 34 publications

References 13 publications

A Double Moral Hazard Model of Organization Design

A Double Moral Hazard Model of Organization Design

Optimal job design in the presence of implicit contracts

Incentive Pay and Performance: Insider Econometrics in a Multi-Unit Firm

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