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Employee Initiative and Managerial Control

  • Heikki Rantakari
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    I analyze the impact of managerial involvement and the allocation of authority on employee initiative in a setting where both a manager and an employee can originate new ideas for implementation. I show that employee initiative is maximized through the combination of formal authority and limited but positive levels of involvement by the manager, a result which thus qualifies the motivational advantages of both formal delegation and a hands-off management strategy. This result arises through an indirect monitoring role played by managerial involvement that has been absent in previous frameworks, and the implications of which for the optimal organizational arrangement are further analyzed. (JEL D23, M12, M54)

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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/mic.4.3.171
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    Article provided by American Economic Association in its journal American Economic Journal: Microeconomics.

    Volume (Year): 4 (2012)
    Issue (Month): 3 (August)
    Pages: 171-211

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    Handle: RePEc:aea:aejmic:v:4:y:2012:i:3:p:171-211
    Note: DOI: 10.1257/mic.4.3.171
    Contact details of provider: Web page: https://www.aeaweb.org/aej-micro
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    1. Philippe Aghion & Jean Tirole, 1994. "Formal and Real Authority in Organizations," Working papers 95-8, Massachusetts Institute of Technology (MIT), Department of Economics.
    2. Bester, Helmut & Krähmer, Daniel, 2007. "Delegation and Incentives," CEPR Discussion Papers 6042, C.E.P.R. Discussion Papers.
    3. Baker, George & Gibbons, Robert & Murphy, Kevin J, 1999. "Informal Authority in Organizations," Journal of Law, Economics and Organization, Oxford University Press, vol. 15(1), pages 56-73, April.
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