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Coordination under the Shadow of Career Concerns

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Author Info
Koch, Alexander K. () (University of Aarhus)
Morgenstern, Albrecht () (Federal Ministry of Finance)

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Abstract

To innovate, employees need to develop novel ideas and coordinate with each other to turn these ideas into better products and services. Work outcomes provide signals about employees' abilities to the labor market, and therefore career concerns arise. These can both be 'good' (enhancing incentives for effort in developing ideas) and 'bad' (preventing voluntary coordination). Our model shows how the firm designs its explicit incentive system and organizes work processes to take these conflicting forces into account. The comparative statics results suggest a link between the increased use of teams and recent changes in labor market returns to skills.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4039.

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Length: 40 pages
Date of creation: Feb 2009
Date of revision:
Handle: RePEc:iza:izadps:dp4039

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Related research
Keywords: career concerns; group incentives; knowledge work; reputation; teams;

Find related papers by JEL classification:
D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
M12 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Personnel Management; Executive Compensation
O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General

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This page was last updated on 2009-11-23.

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