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Organizational Change and Vested Interest

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  • Hendrikse, G.W.J.

    (Tilburg University, Center for Economic Research)

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    Abstract

    The nature of organizational change and the value of headquarters is derived from a model with costs of delay, vested interests and costs of organizational change.The value of headquarters is derived from imposed organizational change. It is viewed as an institution which is able to prevent surplus reducing endogenous commitment.Imposed organizational change is predicted in circumstances where the desired change is not urgent, the loss of accepting lower offers than in the past is above a certain level, and the costs of imposed change are lower than the costs of delay.Delay occurs and change will be voluntary in these circumstances when the situation is not perceived as urgent and costs of imposed change are high.Voluntary organizational change occurs immediately when the desired change is perceived to be urgent.Case studies are presented along these lines of thought.

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    Bibliographic Info

    Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 1996-10.

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    Date of creation: 1996
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    Handle: RePEc:dgr:kubcen:199610

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    Keywords: organizational change;

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    1. Boot, Arnoud W A, 1992. " Why Hang on to Losers? Divestitures and Takeovers," Journal of Finance, American Finance Association, vol. 47(4), pages 1401-23, September.
    2. Fershtman Chaim & Seidmann Daniel J., 1993. "Deadline Effects and Inefficient Delay in Bargaining with Endogenous Commitment," Journal of Economic Theory, Elsevier, vol. 60(2), pages 306-321, August.
    3. Dewatripont, Mathias & Roland, Gérard, 1991. "The Virtues of Gradualism and Legitimacy in the Transition to a Market Economy," CEPR Discussion Papers 538, C.E.P.R. Discussion Papers.
    4. Jensen, Michael C, 1993. " The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems," Journal of Finance, American Finance Association, vol. 48(3), pages 831-80, July.
    5. Barry W. Ickes & Larry Samuelson, 1987. "Job Transfers and Incentives in Complex Organizations: Thwarting the Ratchet Effect," RAND Journal of Economics, The RAND Corporation, vol. 18(2), pages 275-286, Summer.
    6. Joseph Farrell & Garth Saloner, 1985. "Standardization, Compatibility, and Innovation," RAND Journal of Economics, The RAND Corporation, vol. 16(1), pages 70-83, Spring.
    7. Heiner, Ronald A., 1988. "The necessity of delaying economic adjustment," Journal of Economic Behavior & Organization, Elsevier, vol. 10(3), pages 255-286, October.
    8. Fernandez, Raquel & Rodrik, Dani, 1991. "Resistance to Reform: Status Quo Bias in the Presence of Individual-Specific Uncertainty," American Economic Review, American Economic Association, vol. 81(5), pages 1146-55, December.
    9. Bolton, Patrick & Farrell, Joseph, 1990. "Decentralization, Duplication, and Delay," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 803-26, August.
    10. Cramton, Peter C, 1992. "Strategic Delay in Bargaining with Two-Sided Uncertainty," Review of Economic Studies, Wiley Blackwell, vol. 59(1), pages 205-25, January.
    11. Scharfstein, David S & Stein, Jeremy C, 1990. "Herd Behavior and Investment," American Economic Review, American Economic Association, vol. 80(3), pages 465-79, June.
    12. Stahl, Dale II, 1990. "Bargaining with durable offers and endogenous timing," Games and Economic Behavior, Elsevier, vol. 2(2), pages 173-187, June.
    13. Akerlof, George A, 1991. "Procrastination and Obedience," American Economic Review, American Economic Association, vol. 81(2), pages 1-19, May.
    14. Admati, Anat R & Perry, Motty, 1991. "Joint Projects without Commitment," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 259-76, April.
    15. Tversky, Amos & Kahneman, Daniel, 1992. " Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
    16. Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 252, David K. Levine.
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