Abstract/Details

Essays on organizational economics


2005 2005

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Abstract (summary)

This dissertation presents an economic (incentive-oriented) analysis of two essential aspects of organizational strategy: the selection of personnel to ensure loyalty (essays one and two) and the use of the best available information to allocate budgets (essay three).

The first essay analyzes loyalty as an agent's choice to bear personal costs to his superior's direct or indirect benefit. In return, the manager may offer various forms of rewards. Typically only repeated interaction can sustain such an exchange. Beyond loyalty, the manager is interested in the employee's competence. This analysis looks at the tradeoff between these two valued qualities when, as seems likely, more competent agents have more attractive outside opportunities. It finds that: (1) even when loyalty is both feasible and net productive, it may not be optimal (i.e., the manager prefers spot contracting), (2) the manager may find it optimal to hire a less competent employee to induce loyalty, but that (3) where there is loyalty, when loyalty becomes more important, the optimal competence level increases. These insights explain several empirical regularities, including evidence presented from family firms and public agencies.

The second essay demonstrates that in this framework (4) loyalty can be a signal of low competence. The analysis also predicts that (5) a meritocracy—more competent individuals receive more discretion—results when the impact of discretion on the value of loyalty is sufficiently strong compared to the impact on the availability of outside options.

The third essay (with Nolan Miller and Richard Zeckhauser) provides a method for an organization's center to allocate resources to units under its control which are better informed. If units value their own expenditures more than those of their peers, they will seek excess budgets and expenditures. The paper shows how budget authorities can infer productivities from units' expenditure patterns across spending categories and over time. Optimal screening budgets reward more productive units with greater overall budgets. Such screening provides significant welfare gains over traditional fixed or reallocable budgets. Empirical results for a large electricity and infrastructure provider support an important version of the model.

Indexing (details)


Subject
Business costs;
Management;
Essays;
Studies;
Loyalty;
Budgets;
Allocations;
Productivity
Classification
0505: Business costs
0454: Management
Identifier / keyword
Social sciences; Asymmetric information; Budgets; Cooperation; Human resources; Loyalty; Organizational economics
Title
Essays on organizational economics
Author
Wagner, Alexander Florian
Number of pages
155
Publication year
2005
Degree date
2005
School code
0084
Source
DAI-A 66/05, Dissertation Abstracts International
Place of publication
Ann Arbor
Country of publication
United States
ISBN
9780542119842, 0542119846
Advisor
Zeckhauser, Richard J.
University/institution
Harvard University
University location
United States -- Massachusetts
Degree
Ph.D.
Source type
Dissertations & Theses
Language
English
Document type
Dissertation/Thesis
Dissertation/thesis number
3174065
ProQuest document ID
305001393
Copyright
Database copyright ProQuest LLC; ProQuest does not claim copyright in the individual underlying works.
Document URL
http://search.proquest.com/docview/305001393
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