This paper offers an empirical test of complementarities among delegated authority, accountability, and monitoring, using unique survey data collected from group-affiliated companies in Japan. The survey provides information about how various decisions are made within business groups, each of which consists of a large core parent firm and its network of affiliated firms such as subsidiaries and related companies. We find some evidence that delegated authority and accountability are complementary, implying that increasing assigned accountability raises the marginal return from increasing delegated authority. We also obtain a stronger result that performance is likely to be better under the combination of low authority and low accountability or that of high authority and high accountability than under the "mix and match" combinations where one is low and the other high. We then study the effects of monitoring intensity on the authority-accountability pair and find that performance of the firm with the combination of high authority and high accountability is increasing in monitoring intensity, while the combination of low authority and low accountability is not. This result is consistent with the theoretical hypothesis that increasing monitoring intensity raises the marginal return from increasing delegated authority and accountability. J. Japanese Int. Economies 22 (2) (2008) 207-228.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 22 (2008) Issue (Month): 2 (June) Pages: 207-228 Download reference. The following formats are available: HTML
(with abstract),
plain text
(with abstract),
BibTeX,
RIS (EndNote, RefMan, ProCite),
ReDIF