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Article: Incentives, information, and organizational form

TitleIncentives, information, and organizational form
Authors
Issue Date2000
PublisherBlackwell Publishing Ltd. The Journal's web site is located at http://www.blackwellpublishing.com/journals/ROES
Citation
The Review of Economic Studies, 2000, v. 67 n. 2, p. 359-378 How to Cite?
AbstractWe model an organization as a hierarchy of managers erected on top of a technology (here consisting of a collection of plants). In our framework, the role of a manager is to take steps to reduce the adverse consequences of shocks that affect the plants beneath him. We argue that different organizational forms give rise to different information about managers' performance and therefore differ according to how effective incentives can be in encouraging a good performance. In particular, we show that, under certain assumptions, the M-form (multi-divisional form) is likely to provide better incentives than the U-form (unitary form) because it promotes yardstick competition (i.e. relative performance evaluation) more effectively. We conclude by presenting evidence that the assumptions on which this comparison rests are satisfied for Chinese data.
Persistent Identifierhttp://hdl.handle.net/10722/138702
ISSN
2015 Impact Factor: 4.077
2015 SCImago Journal Rankings: 9.250
SSRN
ISI Accession Number ID

 

DC FieldValueLanguage
dc.contributor.authorMaskin, Een_US
dc.contributor.authorQian, Yen_US
dc.contributor.authorXu, Cen_US
dc.date.accessioned2011-09-08T08:13:04Z-
dc.date.available2011-09-08T08:13:04Z-
dc.date.issued2000en_US
dc.identifier.citationThe Review of Economic Studies, 2000, v. 67 n. 2, p. 359-378en_US
dc.identifier.issn0034-6527-
dc.identifier.urihttp://hdl.handle.net/10722/138702-
dc.description.abstractWe model an organization as a hierarchy of managers erected on top of a technology (here consisting of a collection of plants). In our framework, the role of a manager is to take steps to reduce the adverse consequences of shocks that affect the plants beneath him. We argue that different organizational forms give rise to different information about managers' performance and therefore differ according to how effective incentives can be in encouraging a good performance. In particular, we show that, under certain assumptions, the M-form (multi-divisional form) is likely to provide better incentives than the U-form (unitary form) because it promotes yardstick competition (i.e. relative performance evaluation) more effectively. We conclude by presenting evidence that the assumptions on which this comparison rests are satisfied for Chinese data.-
dc.languageengen_US
dc.publisherBlackwell Publishing Ltd. The Journal's web site is located at http://www.blackwellpublishing.com/journals/ROES-
dc.relation.ispartofThe Review of Economic Studiesen_US
dc.rightsThe definitive version is available at www.blackwell-synergy.com-
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.titleIncentives, information, and organizational formen_US
dc.typeArticleen_US
dc.identifier.emailXu, C: cgxu@hku.hk-
dc.identifier.authorityXu, C=rp01118en_US
dc.description.naturepreprint-
dc.identifier.doi10.1111/1467-937X.00135-
dc.identifier.volume67en_US
dc.identifier.issue2-
dc.identifier.spage359en_US
dc.identifier.epage378en_US
dc.identifier.isiWOS:000087525000008-
dc.publisher.placeUnited Kingdom-
dc.identifier.ssrn60829-
dc.identifier.citeulike9070143-

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