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Coordination under the Shadow of Career Concerns

Listed author(s):
  • Koch, Alexander K.

    ()

    (Aarhus University)

  • Morgenstern, Albrecht

    ()

    (Federal Ministry of Finance)

To innovate, employees need to develop novel ideas and coordinate with each other to turn these ideas into better products and services. Work outcomes provide signals about employees' abilities to the labor market, and therefore career concerns arise. These can both be 'good' (enhancing incentives for effort in developing ideas) and 'bad' (preventing voluntary coordination). Our model shows how the firm designs its explicit incentive system and organizes work processes to take these conflicting forces into account. The comparative statics results suggest a link between the increased use of teams and recent changes in labor market returns to skills.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4039.

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Length: 40 pages
Date of creation: Feb 2009
Publication status: published in: B.E. Journal of Theoretical Economics: Topics in Theoretical Economics , 2010, 10 (1), Article 10
Handle: RePEc:iza:izadps:dp4039
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  1. Meyer, Margaret A. & Olsen, Trond E. & Torsvik, Gaute, 1996. "Limited intertemporal commitment and job design," Journal of Economic Behavior & Organization, Elsevier, vol. 31(3), pages 401-417, December.
  2. Jaime Ortega, 2003. "Power in the Firm and Managerial Career Concerns," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(1), pages 1-29, 03.
  3. Oded Galor & Omer Moav, 2000. "Ability-Biased Technological Transition, Wage Inequality, and Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 115(2), pages 469-497.
  4. Eloïc Peyrache & Alexander K. Koch, 2011. "Aligning Ambition and Incentives," Post-Print hal-00641638, HAL.
  5. Alexander K. Koch & Eloïc Peyrache, 2011. "Aligning Ambition and Incentives," Journal of Law, Economics and Organization, Oxford University Press, vol. 27(3), pages 655-688.
  6. Paul Osterman, 1994. "How Common is Workplace Transformation and Who Adopts it?," ILR Review, Cornell University, ILR School, vol. 47(2), pages 173-188, January.
  7. Green, Jerry R & Stokey, Nancy L, 1983. "A Comparison of Tournaments and Contracts," Journal of Political Economy, University of Chicago Press, vol. 91(3), pages 349-364, June.
  8. Emmanuelle Auriol & Guido Friebel & Lambros Pechlivanos, 2002. "Career Concerns in Teams," Journal of Labor Economics, University of Chicago Press, vol. 20(2), pages 289-307, Part.
  9. Suurmond, Guido & Swank, Otto H. & Visser, Bauke, 2004. "On the bad reputation of reputational concerns," Journal of Public Economics, Elsevier, vol. 88(12), pages 2817-2838, December.
  10. Kong-Pin Chen, 2003. "Sabotage in Promotion Tournaments," Journal of Law, Economics and Organization, Oxford University Press, vol. 19(1), pages 119-140, April.
  11. Eve Caroli & John Van Reenen, 2001. "Skill-Biased Organizational Change? Evidence from A Panel of British and French Establishments," The Quarterly Journal of Economics, Oxford University Press, vol. 116(4), pages 1449-1492.
  12. Arijit Mukherjee, 2008. "Sustaining implicit contracts when agents have career concerns: the role of information disclosure," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 469-490.
  13. Fama, Eugene F, 1980. "Agency Problems and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 288-307, April.
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