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On Incentives for an Efficient Flow of Knowledge within Multinationals

  • Amir Shoham

    (Department of Business Administration, Ben-Gurion University, Israel and Negev Academic College of Engineering, Israel)

  • Varda Lewinstein Yaari

    (Department of Business Administration, Ben-Gurion University, Israel)

  • David M. Brock

    (Department of Business Administration, Ben-Gurion University, Israel)

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    In this paper we develop a principal-agent, game-theoretic model of an MNC, intended to add to the understanding of how smart choices between incentives, monitoring, and structures are linked to an effective intra-firm flow of knowledge. We find that the equilibrium depends on the efficiency of substituting incentives for monitoring. Our study sheds light on arguments within the international management field about monitoring, incentives for managers, and managing knowledge transfer between subsidiaries.

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    Article provided by College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan in its journal International Journal of Business and Economics.

    Volume (Year): 2 (2003)
    Issue (Month): 3 (December)
    Pages: 213-226

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    Handle: RePEc:ijb:journl:v:2:y:2003:i:3:p:213-226
    Contact details of provider: Postal: 100 Wenhwa Road, Seatwen, Taichung
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    1. Grossman, Sanford J & Hart, Oliver D, 1983. "An Analysis of the Principal-Agent Problem," Econometrica, Econometric Society, vol. 51(1), pages 7-45, January.
    2. Foss, Nicolai J. & Pedersen, Torben, 2000. "Transferring Knowledge in MNCs: The Role of Sources of Subsidiary Knowledge and Organizational Context," Working Papers 6-2000, Copenhagen Business School, Department of International Economics and Management.
    3. M Krishna Erramilli, 1996. "Nationality and Subsidiary Ownership Patterns in Multinational Corporations," Journal of International Business Studies, Palgrave Macmillan, vol. 27(2), pages 225-248, June.
    4. Rogerson, William P, 1985. "The First-Order Approach to Principal-Agent Problems," Econometrica, Econometric Society, vol. 53(6), pages 1357-67, November.
    5. Gupta, Anil K. & Govindarajan, V., 1994. "Organizing for knowledge flows within MNCs," International Business Review, Elsevier, vol. 3(4), pages 443-457, December.
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