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A Work vs. Perk Model of Leadership and Organizational Culture

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  • Benjamin Keefer

    (Carleton College)

Abstract

This paper considers the leader’s role in forming a culture by choosing the cultural focus and metric when agents have reference-dependent preferences. We find that combining a cultural work metric and external focus maximizes incentives. Principal-leaders favor this type of culture. Under agent-leadership, however, the favored culture critically depends on the relative magnitudes of the agent’s borrowing needs and pledgeable income. If agents’ borrowing needs slightly exceed the pledgeable income, agent-leaders prefer the incentive-maximizing culture. Yet, if agents’ pledgeable income exceeds the borrowing needs, agent-leaders prefer to minimize incentives by emphasizing an external cultural focus and a perk metric.

Suggested Citation

  • Benjamin Keefer, 2016. "A Work vs. Perk Model of Leadership and Organizational Culture," Working Papers 2016-02, Carleton College, Department of Economics.
    • Handle: RePEc:avv:wpaper:2016-02
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    File URL: https://digitalcommons.carleton.edu/cgi/viewcontent.cgi?article=1000&context=econ_repec
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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