Business strategy, human capital, and managerial incentives.
We posit that the value of a manager's human capital depends on the firm's business strategy. The resulting interaction between business strategy and managerial incentives affects the organization of business activities. We illustrate the impact of this interaction on firm boundaries in a...
| Main Authors: | , , |
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| Format: | Journal article |
| Language: | English |
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Blackwell Publishing
2004
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| _version_ | 1797079626949853184 |
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| author | Mailath, G Nocke, V Postlewaite, A |
| author_facet | Mailath, G Nocke, V Postlewaite, A |
| author_sort | Mailath, G |
| collection | OXFORD |
| description | We posit that the value of a manager's human capital depends on the firm's business strategy. The resulting interaction between business strategy and managerial incentives affects the organization of business activities. We illustrate the impact of this interaction on firm boundaries in a dynamic agency model. There may be disadvantages in merging two firms even when such a merger allows the internalization of externalities between the two firms. Merging, by making unprofitable certain decisions, increases the cost of inducing managerial effort. This incentive cost is a natural consequence of the manager's business-strategy-specific human capital. |
| first_indexed | 2024-03-07T00:48:35Z |
| format | Journal article |
| id | oxford-uuid:8591c8b8-3e0d-4804-aa98-c16b35af0340 |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-07T00:48:35Z |
| publishDate | 2004 |
| publisher | Blackwell Publishing |
| record_format | dspace |
| spelling | oxford-uuid:8591c8b8-3e0d-4804-aa98-c16b35af03402022-03-26T21:58:23ZBusiness strategy, human capital, and managerial incentives.Journal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:8591c8b8-3e0d-4804-aa98-c16b35af0340EnglishDepartment of Economics - ePrintsBlackwell Publishing2004Mailath, GNocke, VPostlewaite, AWe posit that the value of a manager's human capital depends on the firm's business strategy. The resulting interaction between business strategy and managerial incentives affects the organization of business activities. We illustrate the impact of this interaction on firm boundaries in a dynamic agency model. There may be disadvantages in merging two firms even when such a merger allows the internalization of externalities between the two firms. Merging, by making unprofitable certain decisions, increases the cost of inducing managerial effort. This incentive cost is a natural consequence of the manager's business-strategy-specific human capital. |
| spellingShingle | Mailath, G Nocke, V Postlewaite, A Business strategy, human capital, and managerial incentives. |
| title | Business strategy, human capital, and managerial incentives. |
| title_full | Business strategy, human capital, and managerial incentives. |
| title_fullStr | Business strategy, human capital, and managerial incentives. |
| title_full_unstemmed | Business strategy, human capital, and managerial incentives. |
| title_short | Business strategy, human capital, and managerial incentives. |
| title_sort | business strategy human capital and managerial incentives |
| work_keys_str_mv | AT mailathg businessstrategyhumancapitalandmanagerialincentives AT nockev businessstrategyhumancapitalandmanagerialincentives AT postlewaitea businessstrategyhumancapitalandmanagerialincentives |