Designing Governance Mechanisms for Knowledge-Intensive
AbstractKnowledge-intensive activities are bound by imperfections that limit the provision of incentives, particularly asymmetric information about inputs and unclear definition of outputs. Thus, performance-based incentives are not possible. We then model a contract in which the firm can use the delegation of decision rights to provide incentives. The main argument is that a fine-tuned allocation of decision rights reduces the information rents of a knowledge provider by offsetting her strategic use of the information advantage. We show that when the firm owns strong complementary assets to leverage the provider's knowledge, the delegation of decision rights can fully resolve the limitations due to asymmetric information. When this condition is not met, the provider is offered full autonomy, but it is optimal for the firm to let the most knowledgeable providers go. We also discuss the generality of our approach.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. 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.
Bibliographic InfoPaper provided by KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy in its series KITeS Working Papers with number 019.
Length: 28 pages
Date of creation: May 2009
Date of revision: May 2009
Contact details of provider:
Postal: via Sarfatti, 25 - 20136 Milano - Italy
Web page: http://www.kites.unibocconi.it/
Postal: E G E A - via R. Sarfatti, 25 - 20136 Milano -Italy
Find related papers by JEL classification:
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- De Bettignies, Jean-Etienne & Chemla, Gilles, 2006.
"Corporate Venturing, allocation of talent, and competition for star managers,"
Economics Papers from University Paris Dauphine
123456789/3027, Paris Dauphine University.
- Jean-Etienne de Bettignies & Gilles Chemla, 2008. "Corporate Venturing, Allocation of Talent, and Competition for Star Managers," Management Science, INFORMS, vol. 54(3), pages 505-521, March.
- De Bettignies, Jean-Etienne & Chemla, Gilles, 2008. "Corporate Venturing, allocation of talent, and competition for star managers," Economics Papers from University Paris Dauphine 123456789/985, Paris Dauphine University.
- Jean-Etienne De Bettignies & Gilles Chemla, 2008. "Corporate Venturing, Allocation of Talent, and Competition for Star Managers," Post-Print halshs-00365942, HAL.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Valerio Sterzi).
If references are entirely missing, you can add them using this form.