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Organizational Incentives and Organizational Mortality

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  • Scott Shane

    (Robert H. Smith School of Business, University of Maryland, College Park, Maryland 20742)

Abstract

Despite a long tradition of research on organizational mortality, organizational theorists have not examined the effect of incentive contracting on firm survival. This paper fills this gap by examining the effect of incentive contracting on the survival of U.S. business format franchise systems over the period 1984-1996. The paper finds empirical support for several hypotheses derived from efficient contracting theory. In general, large firms that adopt policies which screen agents, signal quality, and control agents' free-riding are more likely to survive than large firms which do not adopt these policies.

Suggested Citation

  • Scott Shane, 2001. "Organizational Incentives and Organizational Mortality," Organization Science, INFORMS, vol. 12(2), pages 136-160, April.
    • Handle: RePEc:inm:ororsc:v:12:y:2001:i:2:p:136-160
    DOI: 10.1287/orsc.12.2.136.10108
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    References listed on IDEAS

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