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Making Partner

Author

Listed:
  • Frédéric Loss

  • Antoine Renucci

    (CREG - Centre de recherche et d'études en gestion - UPPA - Université de Pau et des Pays de l'Adour)

Abstract

Associates need reputation and financial resources to make partner at law firms, consultancies, and venture capital organizations. We provide a theory for how this prospect influences the business risk strategy they pursue and their execution effort. In our model, business risk affects how reputation evolves and the benchmark reputation for making partner through the impact of execution effort on the financial resources accumulated. We show that when business risk is observable, associates with good reputation take on high business risk, as opposed to low business risk, in order to protect their reputation. We also show that opening partner positions decreases the effort incentives of the associates with the best reputation. Finally, we conjecture that wage dispersion at the associate level should be higher when business risk is unobservable.

Suggested Citation

  • Frédéric Loss & Antoine Renucci, 2019. "Making Partner," Post-Print hal-02472982, HAL.
    • Handle: RePEc:hal:journl:hal-02472982
    DOI: 10.1111/sjoe.12390
    as

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