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On the choice of incentives in firms: influence activity, monitoring technology and organizational structure

Author

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  • Marco Delmastro

    () (Autorità Garante della Concorrenza e del Mercato)

Abstract

Economists have offered a number of explanations on the introduction of monetary incentives within firms. These range from the classical agency model to the impact exerted by factors such as monitoring technology, influence activity and organizational structure. Numerous empirical contributions have recently provided evidence on part of this literature, especially as concerned the trade-off between incentives and insurance. However there is still much to do in order to offer a complete picture of firm's incentive system. The purpose of this paper is to provide a test to factors that have been usually underrepresented in empirical work but that may be key in favoring or inhibiting the introduction of performance bonuses.

Suggested Citation

  • Marco Delmastro, 2002. "On the choice of incentives in firms: influence activity, monitoring technology and organizational structure," Economics Bulletin, AccessEcon, vol. 12(2), pages 1-13.
  • Handle: RePEc:ebl:ecbull:eb-01l20002
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    References listed on IDEAS

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    1. Lindbeck, Assar & Snower, Dennis J, 2000. "Multitask Learning and the Reorganization of Work: From Tayloristic to Holistic Organization," Journal of Labor Economics, University of Chicago Press, vol. 18(3), pages 353-376, July.
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    3. Kiefer, Nicholas M, 1988. "Economic Duration Data and Hazard Functions," Journal of Economic Literature, American Economic Association, vol. 26(2), pages 646-679, June.
    4. Kandel, Eugene & Lazear, Edward P, 1992. "Peer Pressure and Partnerships," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 801-817, August.
    5. Canice Prendergast, 1996. "What Happens Within Firms? A Survey of Empirical Evidence on Compensation Policies," NBER Working Papers 5802, National Bureau of Economic Research, Inc.
    6. Holmstrom, Bengt & Milgrom, Paul, 1987. "Aggregation and Linearity in the Provision of Intertemporal Incentives," Econometrica, Econometric Society, vol. 55(2), pages 303-328, March.
    7. David Neumark & Peter Cappelli, 1999. "Do "High Performance" Work Practices Improve Establishment-Level Outcomes?," NBER Working Papers 7374, National Bureau of Economic Research, Inc.
    8. Robert Gibbons, 1998. "Incentives in Organizations," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 115-132, Fall.
    9. Delmastro, Marco, 2002. "The determinants of the management hierarchy: evidence from Italian plants," International Journal of Industrial Organization, Elsevier, vol. 20(1), pages 119-137, January.
    10. Thomas N. Hubbard, 1998. "Why Are Process Monitoring Technologies Valuable? The Use of On-Board Information Technology in the Trucking Industry," NBER Working Papers 6482, National Bureau of Economic Research, Inc.
    11. Colombo, Massimo G. & Delmastro, Marco, 1999. "Some stylized facts on organization and its evolution," Journal of Economic Behavior & Organization, Elsevier, vol. 40(3), pages 255-274, November.
    12. Baker, George P, 1992. "Incentive Contracts and Performance Measurement," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 598-614, June.
    13. Perri, Timothy J., 1994. "Influence activity and executive compensation," Journal of Economic Behavior & Organization, Elsevier, vol. 24(2), pages 169-181, July.
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    Cited by:

    1. Luis Otávio Façanha & Marcelo Resende, 2006. "Hierarchical Structure in Brazilian Industrial Firms: an Econometric Study," Economics Working Papers ECO2006/1, European University Institute.

    More about this item

    Keywords

    influence activity;

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • D2 - Microeconomics - - Production and Organizations

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