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Visionaries, Managers, and Strategic Direction

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Author Info
Julio Rotemberg
Garth Saloner

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Abstract

Incentives for profitable innovation may be enhanced by employing a "visionary" CEO whose "vision" biases him in favor of certain projects. CEO vision changes which projects get implemented and thus affects the incentives of employees who can be compensated for their innovative ideas only when they become embodied in implemented projects. Profits may be enhanced further by letting objective managers decide which projects to investigate even though their decisions can depart from the firm's "strategy" by differing from those the CEO would have made.

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Publisher Info
Article provided by The RAND Corporation in its journal RAND Journal of Economics.

Volume (Year): 31 (2000)
Issue (Month): 4 (Winter)
Pages: 693-716
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Handle: RePEc:rje:randje:v:31:y:2000:i:winter:p:693-716

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  1. Martin G. Kocher & Ganna Pogrebna & Matthias Sutter, . "The Determinants of Managerial Decisions Under Risk," Working Papers 2008-04, Faculty of Economics and Statistics, University of Innsbruck. [Downloadable!]
  2. James Dow & Itay Goldstein & Alexander Guembel, 2005. "Commitment to Overinvest and Price Informativeness," OFRC Working Papers Series 2005fe18, Oxford Financial Research Centre. [Downloadable!]
  3. O'Reilly, Charles A., III & Tushman, Michael, 2007. "Ambidexterity as a Dynamic Capability: Resolving the Innovator's Dilemma," Research Papers 1963, Stanford University, Graduate School of Business. [Downloadable!]
  4. Friebel , Guido & Giannetti, Mariassunta, 2002. "Fighting for Talent: Risk-shifting, Corporate Volatility, and Organizational Change," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  5. Rafael Di Tella & Federico Weinschelbaum, 2005. "A Note on Wealth as a Corruption-Controlling Device," Public Economics 0503003, EconWPA. [Downloadable!]
  6. Priyodorshi Banerjee, 2008. "Conflict and Consensus: A Theory of Control in Organisations," The B.E. Journal of Theoretical Economics, Berkeley Electronic Press, vol. 8(1). [Downloadable!]
  7. Goodall, Amanda H. & Kahn, Lawrence M. & Oswald, Andrew J., 2008. "Why Do Leaders Matter? The Role of Expert Knowledge," IZA Discussion Papers 3583, Institute for the Study of Labor (IZA). [Downloadable!]
  8. Bertrand, Marianne & Schoar, Antoinette, 2003. "Managing With Style: The Effect of Managers on Firm Policies," Working papers 4280-02, Massachusetts Institute of Technology (MIT), Sloan School of Management. [Downloadable!]
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This page was last updated on 2009-12-9.


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