Advanced Search
MyIDEAS: Login

The Effectiveness of Alternative Programs of Management by Objectives on Firm Performance: An Experimental Study. (Draft Paper)

Contents:

Author Info

  • Alessandro Rossi
  • Massimo Warglien

Abstract

The research focuses on the use of laboratory experimentation in order to design an effective MBO program for the executives of an italian electric utility corporation (Enel). A game theoretical formulation of the MBO program currently adopted by Enel is given (baseline model) and laboratory experiments are implemented to test (a) how experimental subjects behave within the stylized MBO program and (b) the relative effectiveness on subjects performance of the introduction of two different institutions (liability and tournament rules). Results highlight that: 1) the baseline model resembles what has been observed in Enel: targets negotiated between principals and agents are easy to fulfill and a large majority of executives reach the MBO prize. 2) Liability rules increase the bargaining position of principals and result overall in higher levels of target assigned to agents and higher levels of performance of them; conversely no savings are observed in terms of cost of the MBO program. 3) Tournament rules allow to save more in MBO program costs; on the other side performance are, on average, similar to the baseline and variance is higher since the population splits into two sub-groups where a majority of agents shows performance levels close to the case of the liability rule while a minority of them shirk and decrease their working effort until the minimal performance. Some indications on the use of laboratory experimentation as a tool of organization design are finally suggested.

Download Info

If 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.
File URL: http://www.unitn.it/files/download/19388/rock004.pdf
Our checks indicate that this address may not be valid because: 404 Not Found (http://www.unitn.it/files/download/19388/rock004.pdf [301 Moved Permanently]--> http://web.unitn.it/files/download/19388/rock004.pdf). If this is indeed the case, please notify (Loris Gaio)
Download Restriction: no

Bibliographic Info

Paper provided by Department of Computer and Management Sciences, University of Trento, Italy in its series ROCK Working Papers with number 004.

as in new window
Length: 39 pages
Date of creation: Jan 1999
Date of revision: 12 Jun 2008
Handle: RePEc:trt:rockwp:004

Contact details of provider:
Postal: via Inama, 5 -- I-38100 Trento TN
Phone: +39-0461-882126
Fax: +39-0461-882124
Email:
Web page: http://www.unitn.it/disa
More information through EDIRC

Order Information:
Postal: DISA Università degli Studi di Trento via Inama, 5 I-38122 Trento TN Italy
Email:
Web: http://www.unitn.it/disa

Related research

Keywords:

References

References listed on IDEAS
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.:
as in new window
  1. Fehr, Ernst, et al, 1998. "When Social Norms Overpower Competition: Gift Exchange in Experimental Labor Markets," Journal of Labor Economics, University of Chicago Press, vol. 16(2), pages 324-51, April.
  2. Ernst Fehr & Simon Gachter & Georg Kirchsteiger, 2001. "Reciprocity as a Contract Enforcement Device," Levine's Working Paper Archive 563824000000000143, David K. Levine.
  3. Bull, Clive & Schotter, Andrew & Weigelt, Keith, 1987. "Tournaments and Piece Rates: An Experimental Study," Journal of Political Economy, University of Chicago Press, vol. 95(1), pages 1-33, February.
  4. Busch, Tor, 1998. "Attitudes towards management by objectives: An empirical investigation of self-efficacy and goal commitment," Scandinavian Journal of Management, Elsevier, vol. 14(3), pages 289-299, March.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:trt:rockwp:004. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Loris Gaio).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.