Competition for talent when firms' mission matters

Abstract

We study optimal non-linear contracts offered by a non-profit and a for-profit firm competing to attract workers, who are privately informed about their ability and motivation. Motivated workers are keen to be hired by the non-profit firm because they adhere to its mission. Workers with different ability self-select into firms depending on which organization holds a competitive advantage. This determines the sign and the composition of the wage differential between firms, which encompasses labor donations induced by motivation and the selection effect of ability. Our model thus rationalizes the mixed empirical evidence concerning for-profit vs non-profit wage differentials.

Solution of an imperfect‐quality EOQ model with backorder under fuzzy lock leadership game approach

“…13 A firm's mission model with the competition of talented leaders is considered intelligently. 14,15 During modeling, satisfactions on competition-cooperation 16 are also viewed. Articles on retailing public goods and public-private service responsibility are wisely developed [17][18][19] by the eminent researchers.…”

“…Very recent cooperative games with prospect theory have also been discussed by Metzger and Rieger 13 . A firm's mission model with the competition of talented leaders is considered intelligently 14,15 . During modeling, satisfactions on competition–cooperation 16 are also viewed.…”

Firms’ Ownership, Employees’ Altruism, and Competition

“…However, this literature does not focus on the role played by competition in affecting the firms' hiring decision and in shaping the monetary incentives paid to the employees. Notable exceptions are the papers by Bénabou and Tirole (2016) and Barigozzi and Burani (2019) that consider a competitive environment. However, in both papers firms are homogenous in their objective functions but they are perceived differently from the employees.…”

“…Interestingly,Ellis and McGuire (1986) define doctors as "perfect" if they give the same weight to their monetary compensation and to the patients' utility. Other suitable examples of altruistic employees are scientists who may benefit from finding a cure for a disease, teachers and professors who may be glad to teach to young students and develop methods to improve their learning process.10 In Heyes (2005),Delfgaauw and Dur (2010), andBarigozzi and Burani (2019), motivated workers obtain a non-monetary benefit only when employed by non-profit organizations. Therefore, these firms have a comparative advantage in hiring motivated workers.…”

Incentives, Self-Selection, and Coordination of Motivated Agents for the Production of Social Goods

“…Electronic copy available at: https://ssrn.com/abstract=3890904 Besley and Ghatak, 2005;Brekke and Nyborg, 2008;Delfgaauw and Dur, 2008;Prendergast, 2007;Buurman and Dur, 2012;Auriol and Brilon, 2014;Barigozzi and Burani, 2019). Our model developed in the next section builds on insights from von Siemens (2009, 2011) analyzing the self-selection of workers with heterogeneous motivations for cooperation, as well as von Siemens and Kosfeld (2014) considering heterogeneity in worker ability.…”