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A common pattern of control in firms is for management to retain a broad set of rights, whereas the remaining stakeholders’ contracts provide them with targeted veto rights over specific classes of decisions. We explain this pattern of control sharing as an efficient organizational response that balances the need to encourage management to account for stakeholders’ interests against the need to prevent self-interested stakeholders from blocking valuable proposals. Enforceable obligations of good faith and fair dealing play an essential role in facilitating undivided management control of many decisions. With these legal protections (but not without them), shared control is more likely when the parties are more symmetrically informed and hence, better able to bargain to efficient decisions. This paper was accepted by Joshua Gans, business strategy. Funding: Financial support for the research of P. Milgrom was provided by the National Science Foundation [Grants ITR-0427770 and SES-1947514].

Envy is an unpleasant emotion. If individuals anticipate that comparing their payoff with the (potentially higher) payoff of others will make them envious, they may want to actively avoid information about other people’s payoffs. Given the opportunity to reduce another person’s payoff, an individual’s envy may trigger behavior that is detrimental to welfare. In this case, if individuals anticipate that they will react in a welfare-reducing way, they may also avoid information about other people’s payoffs from the outset. We investigated these two hypotheses using three experiments. We found that 13% of our potentially envious subjects avoided information when they did not have the opportunity to reduce another participant’s payoff. Psychological scales do not explain this behavior. We also found that voluntarily uninformed subjects did neither deduct less of the payoff nor less frequently than subjects who could not avoid the information., CEPA Discussion Papers, 17

What determines whether or not multinational firms transplant their mode of organisation to other countries? We embed the theory of knowledge hierarchies in an industry equilibrium model of monopolistic competition to examine how the economic environment may affect the decision of a multinational firm about transplanting its business organisation to other countries. We test the theory with original and matched parent and affiliate data on the internal organisation of 660 Austrian and German multinational firms and 2200 of their affiliate firms in Eastern Europe. We find that three factors stand out in promoting the multinational firm’s decision to transplant the business model to the affiliate firm in the host country: a competitive host market, the corporate culture of the multinational firm, and when an innovative technology is transferred to the host country. These factors increase the respective probabilities of organisational transfer by 18.5 percentage points, 37, and 31 percentage points.

The organizational behavior literature refers to persistent interaction patterns among members of an organization with distributed knowledge as organizational routines. To formalize this concept, as well as intuitions about organizational routines, we investigate dynamic coordination within a problem-solving team where team members cannot communicate. Each team member has a finite number of actions. There is a single action profile with a positive payoff. The task is to identify that profile through repeated trials. For each of their actions, team members have private information regarding their confidence in that action being required for a solution. In this environment, we refer to deterministic sequences of action profiles, where actions are labeled according to their confidence ranking, as organizational routines. We show that there are equilibria that give rise to organizational routines. These organizational routine equilibria partially solve the team’s coordination problem by synchronizing the team’s search efforts. These organizational routine equilibria are resilient to changes in the environment by being ex post equilibria, to agents having only a coarse understanding of other agents’ strategies by being fully cursed, and to natural forms of agents’ overconfidence. If the distribution over team members’ confidences is sufficiently dispersed, this resilience of organizational routine equilibria comes at the price of suboptimality. In contrast, generically, when this distribution is sufficiently concentrated, optimal equilibria induce organizational routines.

This paper examines the optimal structure of hierarchies when workers differ in the range of tasks they can perform. A hierarchical system may reduce costs by allowing most tasks to be handled by unskilled workers. This may however increase delay for those tasks which must pass through several layers before reaching the appropriate level. The paper characterises an optimal hierarchy when such a trade-off exists. Organizations typically have a hierarchical structure. In recent years, economists have investigated a number of explanations for this, for example the need to monitor workers,' the desire to exploit parallel processing by having agents work simultaneously on a project,2 the need to coordinate decisions,3 and so on. This paper explores another explanation for the prevalence of hierarchies: the desire to economize on skilled workers. A firm typically has many problems flowing in that require decisions, many of which do not need the attention of senior management. By employing relatively unskilled workers to deal with tasks initially, one may therefore be able to employ relatively few senior managers. For example, in a shop most customer queries can be dealt with by low-paid assistants, with only the more important problems passed on to supervisors. The drawback of such a hierarchy is that it may delay some decisions by making them pass through more than one layer of control rather than being dealt with immediately. The paper aims to explore the implications of this trade-off between cost and delay for the structure of hierarchies. There are of course many aspects of hierarchies. This paper focuses on a particular one which has been previously neglected. In the model considered, workers differ in their ability to make decisions. Abler workers are capable of making (good) decisions in a wider range of tasks than less able ones. There is no horizontal specialization into different jobs and so the only motivation for employing less able workers is that they command lower wages. Tasks pass through the levels of the hierarchy until they can be dealt with. Software support fits this framework well. Typically, when one contacts a company because of a problem with a package, the enquiry is initially dealt with by low-level staff. If they cannot solve the problem, they hand it on to the next level, who in turn hand it on to the next level if they cannot solve it and so on until it is dealt with. A large number of levels may create considerable delay. Similarly in hospitals in the U.K., routine deliveries of babies are usually dealt with by mid-wives. A junior doctor will be brought in if there is a problem and he in turn will call

Considered are imperfectly discriminating contests in which players may possess private information about the primitives of the game, such as the contest technology, valuations of the prize, cost functions, and budget constraints. We find general conditions under which a given contest of incomplete information admits a unique pure-strategy Nash equilibrium. In particular, provided that all players have positive budgets in all states of the world, existence requires only the usual concavity and convexity assumptions. Information structures that satisfy our conditions for uniqueness include independent private valuations, correlated private values, pure common values, and examples of interdependent valuations. The results allow dealing with inactive types, asymmetric equilibria, population uncertainty, and the possibility of resale. It is also shown that any player that is active with positive probability ends up with a positive net rent.

We incorporate trade in tasks a la Grossman and Rossi-Hansberg (2008) into a small open economy version of the theory of firm organization of Marin and Verdier (2012) to examine how offshoring affects the way firms organize. We show that the offshoring of production tasks leads firms to reorganize with a more decentralized management, improving the competitiveness of the offshoring firms. We show further that the offshoring of managerial tasks relaxes the constraint on managers but toughens competition, and thus has an ambiguous impact on the level of decentralized management and CEO wages of the offshoring firms. In sufficiently open economies, however, managerial offshoring unambiguously leads to more decentralized management and to larger CEO wages. We test the predictions of the model based on original firm level data we designed and collected of 660 Austrian and German multinational firms with 2200 subsidiaries in Eastern Europe. We find that offshoring firms are 33.4% more decentralized than non-offshoring firms. We find further that the average fraction of managers offshored reduces the level of decentralized management by 3.1%, but increases the level of decentralized management by 4% in industries with a level of openness above the 25th percentile of the openness distribution. Lastly, we find that one additional offshored manager lowers CEO wages relative to workers by 4.9%.

We model the State as a self-enforcing agreement over the use of force. Powerful individuals punish violations of contracts and property rights, and, if they shirk or abuse their power, society reverts to a low-production “anarchy” stage. Our model has two implications. First, improvements in coercion move the optimal enforcement system from private ordering, where coercive punishments are not used, to centralized State, where punihments sanction violations by citizens but not by the ruler, to decentralized State, where punishments sanction all violations. Second, institutions that reinforce the allegiance of State militias to the law simultaneously insure that contract violations are punished and that the ruler does not expropriate citizens; thus, they are more productive than judicial institutions, which solely facilitate contract enforcement. The model is consistent with the historical correlation between technological advances in coercion and the transition from private to State enforcement, and with the fact that institutional constraints on the Executive affected the long-run economic development of nations more than improvements in judicial institutions (Acemoglu and Johnson 2005). We also provide a framework for the optimal sequencing of institutional reforms: they should focus first on the binding self-enforcement constraint (punishment or expropriation), and switch to other constraints when the initially binding constraint becomes slack.

We show that economic conditions when managers enter the labor market have long-run effects on their career paths and managerial styles. Managers who began their careers during recessions become CEOs more quickly, but at smaller firms. They also have more conservative styles, such as lower investment in capital expenditures and research and development, more cost cutting, and lower leverage and working capital needs. These recession effects appear to be largely driven by the characteristics of the CEO’s first job (recession CEOs tend to start in smaller or private firms), which suggests that the early work environment is important to the formation and selection of managers.

Contracting frictions affect the organization of firms, but how much does this matter on the aggregate level? This paper studies how costly supplier contract enforcement shapes the patterns of intermediate input use and quantifies the impact of these distortions on aggregate productivity and welfare. Using the frequency of litigation between US firms to measure the potential for hold-up problems, I find a robust relationship between countries’ input-output structure and their quality of legal institutions: in countries with high enforcement costs, firms have lower expenditure shares on intermediate inputs in sector pairs where US firms litigate frequently for breach of contract. I adapt a Ricardian trade model to the study of intersectoral trade, and show that the variation in intermediate input shares that is explained by contracting frictions is large enough to generate sizeable welfare increases when enforcement institutions are improved.

This paper analyses the potentials of jobs to be offshored or outsourced. We use four waves of the BIBB/BAuA Survey on Qualification and Working Conditions in Germany and employ a large set of potential determinants of offshoring and outsourcing derived from the literature. Applying the datadriven method of principal component analysis, we provide two indicators that measure both the offshoring potentials (cross-country geographical relocation) and the outsourcing potentials (organisational relocation) at the level of jobs, occupations, tasks, or industries. Our results show significant variation in the determinants of both dimensions. In addition to the direct contribution, our paper provides two indicators that can be used to further investigate the economic effects of job offshorability.

We study how firms differ from their competitors using new time-varying measures of product differentiation based on text-based analysis of product descriptions from 50,673 firm 10-K statements filed yearly with the Securities and Exchange Commission. This year-by-year set of product differentiation measures allows us to generate a new set of industries and corresponding new measures of industry competition where firms can have their own distinct set of competitors. Our new sets of industry competitors better explain specific discussion of high competition by management, rivals identified by managers as peer firms and firm characteristics such as profitability and leverage than do existing classifications. We also find evidence that firm R&D and advertising are associated with subsequent differentiation from competitors, consistent with theories of endogenous product differentiation.

Many studies have looked at how individual player traits influence individual choice in the repeated prisoner’s dilemma, but few studies have looked at how the average traits of pairs of players influence the average choices of pairs. We consider cognitive ability, patience, risk tolerance, and the Big Five personality measures as predictors of individual and average group choices in a ten-round repeated prisoner’s dilemma. We find that a pair’s average cognitive ability measured by the Raven’s IQ test predicts average cooperation rates robustly and average earnings more modestly. Higher individual cognitive ability also predicts a greater probability of sustaining cooperation in the second round, suggesting that positive reciprocity is more likely among players with higher Raven’s scores. Openness is the only control variable that predicts first-round cooperative behavior.

Relational contracts – informal agreements sustained by the value of future relationships – are integral parts of global production processes. This paper develops a repeated-game model of global sourcing in which final good producers decide whether to engage with their suppliers in relational contracting and whether to integrate a supplier into a firm's boundaries or deal with the latter at arm's-length. The model predicts that the relative prevalence of vertical integration increases in the long-term orientation of the headquarters' and suppliers' managers. It further suggests that the share of a foreign subsidiary owned by a final good producer increases in the headquarters' long-term orientation. Combining industry-level data from the U.S. Census Bureau's Related Party Trade database with measures for long-term orientation from Hofstede et al. (2010) and the World Management Survey, I find empirical evidence supportive of the positive link between the long-term orientation of cooperation parties and the relative prevalence of vertical integration. Using information on managerial composition of firms and ownership stakes from the Bureau van Dijk's Orbis database, I find that firms led by long-term oriented managers own higher shares of their foreign subsidiaries.

Members of groups and organizations often have to decide on rules that regulate their contributions to common tasks. They typically differ in their propensity to contribute and often care about the image they project: in particular, they want to be perceived by other group members as being high contributors. In such environments we study, from both a positive and normative perspective, the interaction between the way members vote on rules and their subsequent contribution decisions. We show how endogenous norms can emerge. We study in particular the role played by the visibility of individual actions, votes or contributions. While making votes visible always increases welfare in our setting, making contributions public can be welfare decreasing as it makes some rules more likely to be rejected.

This paper measures the impact of low-cost transport by rail in Malawi on the dispersion of agricultural commodities prices across markets by exploiting the quasi-experimental design of the nearly total collapse of domestic transport by rail in January 2003 due to the destruction of a railway bridge at Rivirivi, Balaka. Estimations are based on monthly market prices of four agricultural commodities (maize, groundnuts, rice, and beans) in 27 local markets for the period 1998–2006. Market pairs connected by rail when the railway line was operational are intervention observations. Railway transport services explain a 14 percent to 17 percent reduction in price dispersion across markets. Geographical reach of trade varies by crop, most likely related to storability and geographical spread of production. Perishability appears to increase impact reflecting limited scope for arbitrage. Overall, impacts are remarkably similar in size across commodities.

Philosophers, psychologists, and economists have long argued that certain decision rights carry not only instrumental value but may also be valuable for their own sake. The ideas of autonomy, freedom, and liberty derive their intuitive appeal - at least partly - from an assumed positive intrinsic value of decision rights. Providing clean evidence for the existence of this intrinsic value and measuring its size, however, is intricate. Here, we develop a method capable of achieving these goals. The data reveal that the large majority of our subjects intrinsically value decision rights beyond their instrumental benefit. The intrinsic valuation of decision rights has potentially important consequences for corporate governance, human resource management, and optimal job design: it may explain why managers value power, why employees appreciate jobs with task discretion, why individuals sort into self-employment, and why the reallocation of decision rights is often very difficult and cumbersome. Our method and results may also prove useful in developing an empirical revealed preference foundation for concepts such as "freedom of choice" and "individual autonomy".

International audience; In this paper we conduct a laboratory experiment to test the extent to which Moore and Repullo’s subgame perfect implementation mechanism induces truth-telling, both in a setting with perfect information and in a setting where buyers and sellers face a small amount of uncertainty regarding the good’s value. We find that Moore–Repullo mechanisms fail to implement truth-telling in a substantial number of cases even under perfect information about the valuation of the good. Our data further suggests that a substantial proportion of these lies are made by subjects who hold pessimistic beliefs about the rationality of their trading partners. Although the mechanism should—in theory—provide incentives for truth-telling, many buyers in fact believe that they can increase their expected monetary payoff by lying. The deviations from truth-telling become significantly more frequent and more persistent when agents face small amounts of uncertainty regarding the good’s value. Our results thus suggest that both beliefs about irrational play and small amounts of uncertainty about valuations may constitute important reasons for the absence of Moore–Repullo mechanisms in practice.

A principal’s production decision imposes a negative externality on an agent. The principal may be a pollution-generating firm, the agent may be a nearby town. The principal offers a contract to the agent, who has the right to be free of pollution. Then the agent privately learns the disutility of pollution. Finally, a production level and a transfer payment are implemented. Suppose there is an upper bound (possibly zero) on payments that the agent can make to the principal. In the second-best solution, there is underproduction for low cost types, while there is overproduction for high cost types. In contrast to standard adverse selection models of pollution claim settlements, there may thus be too much pollution compared to the first-best solution.

Germany Inc. was an idiosyncratic form of industrial organization that put financial institutions at the center. This paper argues that the consumption of private benefits in related party transactions by these key agents can be understood as a compensation for their coordinating and monitoring function in Germany Inc. As a consequence, legal tools apt to curb tunneling remained weak in Germany from the perspective of outside shareholders. While banks were in a position to use their firm-level knowledge and influence to limit rent-seeking by other related parties, their own behavior was not subject to meaningful controls. With the dismantling of Germany Inc. banks seized their monitoring function and left an unprecedented void with regard to related party transactions. Hence, a “traditionalist” stance which opposes law reform for related party transactions in Germany negatively affects capital market development, growth opportunities and ultimately social welfare.

Innovations on plant varieties can be protected by patents or Plant Breeders’ Rights (PBRs). Although these methods of protection have similarities, they also have major differences. With the PBR regime, farmers are allowed to save part of their harvest to replant during the next period (“farmers’ exemption”). To comply with international regulation, they must pay a tax to seed producers for the loss incurred due to this exemption. We analyze the impact of this exemption and its associated tax on seed prices and on the incentives to innovate in a monopoly setting. We find that with only a PBR regime, a relatively high tax level is necessary to eliminate self-production. If both patent and PBR regimes coexist, farmers might still self-produce if the seed innovation is protected with a PBR. Our findings suggest that the coexistence of the two regimes does not fully prevent self-production. Nevertheless, it boosts the research investment which is a non-monotonic function of the tax. The seed producer might over or under invest compared to what is socially optimal. Moreover, incentives to innovate are the strongest, either with a patent regime or with a PBR regime for which a high tax prevents seed saving. In terms of welfare, having both systems has ambiguous effects.

There is mounting evidence of the influence of personal characteristics of CEOs on corporate outcomes. In this paper we analyze the relation between military service of CEOs and managerial decisions, financial policies, and corporate outcomes. Exploiting exogenous variation in the propensity to serve in the military, we show that military service is associated with conservative corporate policies and ethical behavior. Military CEOs pursue lower corporate investment, are less likely to be involved in corporate fraudulent activity, and perform better during industry downturns. Taken together, our results show that military service has significant explanatory power for managerial decisions and firm outcomes.

The purpose of this paper is to show how trust as an organizational value contributes to employee competence utilization in the case of innovation capability. Thus, it is the objective of this paper to analyze the positive impacts, but also potential limits of trust in business management. The research paper uses two different quantitative empirical studies drawn from German and Austrian mid-sized companies to empirically test this interrelation. As a result, the paper determines particular aspects of trust such as accountability, shared norms and the ability to take responsibility to be interrelated with the usage of employee competences and underlines a positive connection between product innovation performance and trust. However, the trust concept needs enriching elements to be balanced towards a feeling of mutual reliance and support creativity instead; inclusions of bridging social capital, elements of distrust and a pioneering spirit are to be mentioned here.

Mature capitalism and market economy realities become intelligible also by scrutinizing their "prodigal children": modern business corporations. But these are not some undivided entities. Beyond the place in the global division of labour, they are fiefs of in-built specialization among the corporate governance stakeholders, each of them representing individual-based aggregations of pure catallactic functions. With an atomized, anonymous, asymmetrical and amalgamated ownership in a globalized capital market, with the multi-level directorship, delegated to harmonize profit-orientated investment interests, with creditors, but also with other suppliers of factors of production, modern corporations seem to have overshadowed both the real entrepreneurs-actors as well as the pure corresponding function. Our article is a (praxeo)logical exercise to pinpoint and reveal the realistic field of definition of the "entrepreneurship function" within the modern corporate spectrum, delimiting and portraying the entrepreneurial aspect out of the real characters that inhabit the corporate entourage (precisely said, of shareholders, managers, creditors). It seems that the modern literature on the law and economics of the firm has lost sight of the entrepreneur(ship), whose presence is felt but rarely positively identified. The endeavour to locate and isolate this, along with the associated incentives and logic of action is a task with some analytical merits. A thorough discrimination of the entrepreneurs' position inside the corporate field and, respectively, of the "natural" vs. "allowed" decision spheres can generate sounder judgments about the wellstructured and poorly-structured companies (good vs. poor corporate governance) or about institutions found to be business (un)friendly (good vs. poor corporate law-making). We define "good governance" at the level of the corporate form the situation when incentives are aligned with rights and obligations, and the "good law" the norm which does not alter the common sense of property rights and freedom of contracting. Without knowing them, any legal organization of the corporate form will be fraught with problems.

The purpose of this study is to examine which personality traits explain the amount of variance in organizational dissent and whether organizational climate has a moderating role on the relationship between personality traits and organizational dissent. A convenience sampling was used and 527 Turkish participants completed the survey questionnaire. The results show that conscientiousness, agreeableness, and openness to experience personality traits explain the variance in upward dissent. In addition, extraversion and emotional stability contribute to displaced dissent whereas emotional stability predicts the variance in latent dissent. Moreover, humanistic climates have a moderating role on the relationship between conscientiousness and upward dissent. On the other hand, formalization climates have a moderating effect between extraversion and displaced dissent. Overall, the results support the association between personality and employee dissent and the partial moderating role of organizational climate on this relationship. Organizations may utilize the results in their efforts to create an organizational climate that supports the expression of different ideas and thoughts. Organizational leaders may apply the study outcomes about role of employee personality and organizational climate to motivate employees’ upward dissent.

El presente estudio, con base en las nociones de costos de transacción y gestión de la cadena de suministro, analiza cómo la adopción de prácticas administrativas en la cadena de suministro reduce los costos de transacción entre productores y empacadores en la industria del aguacate en México. Se usan dos fuentes de información: entrevistas a distintos actores de la industria y revisión de documentos. Las conclusiones muestran que la adopción de tres prácticas (estandarización del producto, proveedor asociado e intercambio de información) han sido una solución ante desafíos como la mejora en la calidad, la certidumbre en la oferta del producto y una mejor coordinación entre oferta y demanda.

This paper introduces an empirical investigation of on-the-job relationships by studying two facets of relationships, namely time spent in relationships with colleagues and clients and quality of relationships cultivated on the job. The analysis is carried out on a sample of organisations in the welfare sector. This sector is characterised by the relevance of relationships due to the multitasking activity performed; specifically, the quality of services produced is frequently to result from attention paid to clients and relational aspects. The paper focuses on both the determinants of time spent in relationships and employees satisfaction with relationships in order to understand the main factors determining the development of relationships, as well as the impact of relationships with colleagues and superiors on employees’ wellbeing and performance. The natural traits of employees and their motivations towards relationships, affective and informational support by colleagues and superiors and the working environment are individuated as determinants of good-quality relationships. Furthermore, the results show that having good on-thejob relationships enhances job satisfaction, but also workforce productivity, with positive consequences for organisations as well.

In this paper we analyze a principal's optimal monitoring strategies in a team environment. In doing so we study the interaction between formal monitoring and informal (peer) monitoring. We show that if the technology satisfies complementarity, peer monitoring substitutes for the principal's monitoring. However, if the technology satisfies substitution, the principal's optimal monitoring is independent of the peer monitoring. We also show that if the technology satisfies complementarity, then the principal in the optimal contracts will monitor more closely than in the case of substitution. (JEL D23, D82, M54)

Organizations are all around us. Culture is trickier—to analyze and even to see. We consider both the effect of management on culture and the effect of culture on performance. We begin by describing an intervention that dramatically improved outcomes and conspicuously included a culture-change component. We then use details from this intervention to describe potential empirical analyses of the association between organizational culture and performance in this and similar settings. Finally, we describe opportunities for theoretical models to explore how and why organizational culture might influence organizational performance.

The aim of this study is conducting bibliometric content analysis on academic articles related leader-member exchange theory which published in Turkish literature. Thus, the contribution of Turkish literature to leader-member exchange theory will revealed. Moreover, this research will serve as an important assessment to who done research and will do research about this phenomenon. The scope of research, 20 published & accessible empiric article which in domestic literature until 2014 was reviewed. When phenomenon of leader-member exchange was dependent variable, independent variable and mediating variable, the other dependent and independent variables have been introduced. According to result, in order that organizational, personal and leadership factors develop into useful behaviors and attitudes, leader-member exchange has been shown to be a significant mediating role. Creating a culture of collaboration and group climate, transformational leadership, extroverts and self-sufficiency personality increase leader-member interaction, this interaction will increase the effectiveness of the organization, positive work attitudes, psychological empowerment and job performance, and decrease intention of leaving the organization, in fact leads to extra effort by employees for organizations.

We examine the relationship between the organization of a multi-divisional firm and its ability to adapt production decisions to changes in the environment. We show that even if lower-level managers have superior information about local conditions, and incentive conflicts are negligible, a centralized organization can be better at adapting to local information than a decentralized one. As a result, and in contrast to what is commonly argued, an increase in product market competition that makes adaptation more important can favor centralization rather than decentralization. (JEL D21, D23, F23, L22)

Purpose - The paper examines the relationships between CEOs' personal traits, emotions, attitudes and tolerance of ambiguity; and subsequently, the influence of CEOs' ambiguity tolerance in firms' performance. Design/methodology/approach - Survey data were collected from 256 ICT firms established in Greece. Their CEOs completed questionnaires examining TOA, personal traits, emotions and attitudes in the workplace. Principal components analysis and ordinary least-squares regressions were used to explore the hypotheses of the paper. Findings - Three factors characterize CEOs' emotions, namely pleasure, dominance and arousal; two factors their involvement, namely importance and interest; and, respectively, one their emotional intelligence namely, empathy/handling relationships. Further, locus of control; importance; arousal; empathy/handling relationships and interest affect decisively CEOs' tolerance of ambiguity, which in turn, seems to influence positively firms' performance. Research limitations/implications - Further research is required in Greek ICT industry regarding the influence of CEOs'emotional and cognitive attributes in organizations' financial performance. Likewise, this research should be expanded to other industries. Originality/value - The originality of this study lies in the finding that emotional and cognitive characteristics affect CEOs' TOA, which, in turn, influences significantly firms' performance. Another significant contributing factor is that the study is carried out in Greece, where few studies have been conducted in this area.

Can formal contracts help resolving the holdup problem? We address this important question by studying the holdup problem in repeated transactions between a seller and a buyer in which the seller can make relation-specific investments in each period. In contrast to previous findings, we demonstrate that writing a simple fixed-price contract based on product delivery is of value even when relation-specific investment is purely cooperative. In particular, there is a range of parameter values in which a higher investment can be implemented only if a formal fixed-price contract is written and combined with an informal agreement on additional payments or termination of future trade, contingent upon investments. Furthermore, we show that under an additional natural assumption, focusing our attention on fixed-price contracts as a form of formal contracts is without loss of generality. The key driving force of our result is a possibility that the threat-point effect is negative, i.e., the relation-specific investment decreases the surplus under no trade. This possibility, although very plausible, has been largely ignored in previous theoretical/empirical analyses of the holdup problem.

Intellectual capital has become the leading resource for creating economic value and there are an important number of publications focused on this area of research. In spite of the interest for this area of research, the existence of different terms regarding intellectual capital makes the process of definition and classification difficult. The purpose of this study is to analyze the concepts related to intellectual capital by establishing the connections and correlations between the terms in order to make the term of intellectual capital fully understandable and also to explain how the components of intellectual capital can be structured. The analysis of intellectual capital definitions is significant because it is a first step in intangible factors understanding, having implications on the company pattern of knowledge evaluation. Of all the terms analyzed, intangible assets allows a clear definition of its meaning, its components and thus provides insight into ways of assessing the knowledge of an entity.

We estimate the effect of the UK Stamp Duty Land Tax (SDLT) - a transfer tax on the purchase price of property or land - on different types of household mobility using micro data. Exploiting a discontinuity in the tax schedule, we isolate the impact of the tax from other determinants of mobility. We compare homeowners with self-assessed house values on either sides of a cut-off value where the tax rate jumps from 1 to 3 percent. We find that a higher SDLT has a strong negative impact on housing-related and short distance moves but does not adversely affect job-induced or long distance mobility. Overall, our results suggest that transfer taxes may mainly distort housing rather than labor markets.

In this paper, I seek to understand the behavioral basis of higher organizational learning and adaption as a teleological dynamic equilibrium process to decipher the underlying psycho-physiological aspects of individual cognitive learning related to organizational adaption. Dynamics of cognitive learning has some differential paths within the neural circuitry which follows certain patterns that leads to individual as well as organized evolution in course of a learning process. I undertake a comparative analysis of human cognitive and behavioral changes and the active mechanisms underlying animal behavior and learning processes to understand the differential patterns of these adaptive changes in these two species. Cognitive behavioral learning processes have certain economic perspectives which help an individual to attain efficiency in workplace adaptation and in learning which however, the individual when being part of an alliance, ember positive influence on the society or organization as a whole. Comparatively, in primates, I review some empirical evidences drawn from chronological studies about cognitive behavioral learning process and adaptation as well as the presence of the capacity of making attributions about mental states, which exists in rudimentary form in chimpanzees and apes. Following this, I apply the outcomes of the findings on different aspects of human cognitive and adaptive behavioral learning-induced evolutionary changes and how human beings are able to exploit the presence of these additive advantages under cluster settings. 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In the paper the trade-offs among endogenous transaction costs caused by two-sided moral hazard, exogenous monitoring cost, and economies of specialization are specified in a Grossman, Hart and Moore (GHM) model to absorb Maskin and Tirole's recent critique and Holmstrom and Milgrom's criticism of the model of incomplete contract. The extended GHM model allowing incomplete contingent labor contract as well as complete contingent trade contract of goods is used to explore the implications of structure of ownership and residual rights for the equilibrium network size of division of labor and productivity.

We investigate the effects of organizational culture and personal value orientations on performance under individual and team contest incentives. We develop a model of regard for others and in-group favoritism predicting interaction effects between organizational culture and personal values in the contest games. The predictions are tested in a computerized lab experiment with exogenous control of both organizational culture and incentives. In line with our theoretical model we find that prosocial (proself) orientated subjects exert more (less) effort in team contests in the primed prosocial organizational culture condition, relative to the neutrally primed baseline condition. Further, when the prosocial organizational culture is combined with individual contest incentives, prosocial subjects no longer outperform their proself counterparts. These findings provide a first, affirmative, causal test of person-organization fit theory. They also suggest the importance of a 'triple-fit' between personal preferences, organizational culture and incentive mechanisms for prosocially orientated individuals.

Consider a non-governmental organization (NGO) that can invest in a public good. Should the government or the NGO own the public project? In an incomplete contracting framework with split-the-difference bargaining, Besley and Ghatak (2001) argue that the party who values the public good most should be the owner. We demonstrate the robustness of their insight when the split-the-difference rule is replaced by the deal-me-out solution. Our finding is in contrast to the private good results of Chiu (1998) and De Meza and Lockwood (1998), who show that the optimal ownership structure crucially depends on whether the split-the-difference rule or the deal-me-out solution is used.

This paper is concerned with the interaction between fully and boundedly rational agents in situations where their interests are perfectly aligned. The cognitive limitations of the boundedly rational agent do not allow him to fully understand the market conditions and lead him to take non-optimal decisions in some situations. Using categorization to model bounded rationality, we show that the fully rational agent can nudge, i.e., he can manipulate the information he sends and decrease the expected loss caused by the boundedly rational agent. Assuming different types for the boundedly rational agent, who differ only in the categories used, we show that the fully rational agent may learn the type of the boundedly rational agent along their interaction. Using this additional information, the outcome can be improved and the amount of manipulated information can be decreased. Furthermore, as the length of the interaction increases the probability that the fully rational agent learns the type of the boundedly rational agent grows. Classification-JEL: C92, D21, D22, D23 Keywords: bounded rationality; categorization; nudging; learning., International Journal of Economic Behavior, Vol 4, No 1 (2014): International Journal of Economic Behavior

This paper examines markets, firms, and the law as alternative institutional arrangements for organizing transactions that involve transaction-specific investments and uncertain performance. The analysis is the logical extension of Coase's seminal analysis of the market-firm boundary on one hand, and the market-law boundary on the other. It thus combines insights from the literature on industrial organization and law and economics. The result is a unified framework that reveals the relative advantages and disadvantages, within a fairly simple economic setting, of market exchange, court ordering (contracts), and internal governance (agency).

We study a gift exchange game with 12 employees and one employer. When the employer can offer individually differentiated wages in a setting without collective action, we observe high levels of wages, effort choices, and total earnings. When the employer is restricted to offering a uniform wage, trust and reciprocity drop dramatically due to widespread shirking. The stepwise introduction of two collective action mechanisms, strike and coordination, increases the employees׳ share of the total earnings, but does not mitigate the free-riding problem. Adding employment risk to the collective action setup drives up wages, reduces free-riding, and leads to higher total earnings. However, this increase in productivity is not sufficient to achieve the high levels of wages, efforts and earnings that we observe with individually differentiated wages.

The aim of this study is to find out r elationship between behaviors of people who tend to loaf in organizational context and their impression management strategies, and to reveal specific impression management strategies applied by loafers. Our research is conducted with voluntary participation of 100 bank clerks, who work at a private bank located in Ankara, Turkey. Data were collected by means of questionnaires. Findings indicate that social loafers are engaged in impression management strategies. Loafers, who feel disconnected, behave distractive and disruptive. However, perceived results of loafing curtail their face saving efforts. Findings are further discussed and recommendations for future studies are emphasized.

Today’s organization increasingly utilizes all kind of teams in order to surpass their competitors through flexibility, adaptability and innovation, features which are seen to characterize the teams. For this purpose, the concept of synergy in teams’ activity is often mentioned as the prime reason for which collective work is considered to be superior comparative with individual work. But what exactly does it mean? The present paper aims to shed some light on the concept of synergy in work teams and its positive effects, namely, the social consequences of collective work such as social compensation, social indispensability, social comparison, social identity, but also its negative effects, such as free-riding, social loafing and sucker effect. These are important group phenomena that managers should be aware of because they have a major impact on team performance, and consequently, on organization performance.

The contemporary management of the intellectual capital of an organization, as a major determinant for efficient and effective operation of the organization has access to the teamwork. Teamwork means quality leadership which is necessary for a successful team management. In the theory and the practice are given a number of models for teamwork and team leadership, however, in this case the subject of this paperwork will be the analyzing of the model of team leadership according to Hill. According to this model there are two functions of team leading established: leading functions in the team and leading functions out of the team. In the first part, which refers to the functions of leadership in the team, are set two major categories: team leader's tasks and the built relationships and atmosphere in the team. In terms of the functions of the leader out of the team, the model focuses on two categories, namely: the functions of leadership out of the team, but within the organization and leading functions of the team outside the organization.

According to the International Accounting Standards – IAS 38 „Intangible assets”; these assets are identifiable non-monetary assets under construction were considered without physical substance. Lack actual physical form must not be understood that an intangible asset would have no material support, because the presence of any intangible asset can be demonstrated only by a support material form. Exmple: frequently encounter compact-disc (in case a software), legal documentation (in the case of licences, trade marks and patents of invention), contracts, permits and licences, technical documentation or films. Nowadays we are constantly subjected to the changing flow of information that is found in a perpetual technological change which started the emergence of a new stage in the society development that which carries the name of knowledge. The object of my research is the patent for the structural funds reimbursable project submitted in the "Operational Program, Economic Competitiveness" Operation 2.3.1. "Support for start-ups and innovative spin-offs. Patent is an official document certifying the inventor, the exclusive right to produce a certain good or product or use a particular process. Remember that evaluation of intangible assets is the most complex and systematic procedure.

We develop indicators for signs of liquidity shortages and potential financial problems of banks by studying transaction data of the Dutch part of the European real time gross settlement system and collateral management data. The indicators give information on 1) overall liquidity position, 2) the interbank money market, 3) the timing of payment flows, 4) the collateral's amount and use and 5) bank run signs. This information can be used both for monitoring the TARGET2 payment system and for individual banks' supervision. By studying these data before, during and after stressful events in the crisis, banks' reaction patterns are identified. These patterns are translated into a set of behavioural rules, which can be used in payment systems' stress scenario analyses, such as e.g. simulations and network topology. In the literature behaviour and reaction patterns in simulations are either ignored or very static. To perform realistic payment system simulations it is crucial to understand how banks react to shocks.

Consider a seller who can make an observable but non-contractible investment to improve an intermediate good that is specialized to a particular buyerʼs needs. The buyer then makes a take-it-or-leave-it offer to the seller. The seller has private information about the fraction of the ex post surplus that he can realize on his own. Compared to a situation with complete information, additional investment incentives are generated by the sellerʼs desire to pretend a strong outside option. On the other hand, ex post efficiency is not attained since asymmetric information at the bargaining stage sometimes leads to inefficient separations.

We extend the propertyrights framework to allow for a separation of the ownership rights of access and veto and for sequential investment. Parties investing first do so before contracting is feasible. It is possible, however, that parties investing second can share (at least some of) their investment costs. Along with this costsharing effect, the incentive to invest is affected by a strategic effect generated by sequential investment. Together these effects can overturn some of the predictions of the propertyrights literature. For example, the most inclusive ownership structure might not be optimal, even if all investments are complementary.

Bu calismanin amaci, psikolojik sozlesmelerin iki turu olan iliskisel ve islemsel sozlesmelerde algilanan ihlalin, isten ayrilma niyeti ve algilanan orgutsel destek uzerindeki etkisini belirleyebilmektir. Bu amac kapsaminda, Turkiye’de yer alan devlet ve vakif universitelerinde gorev yapan 570 akademik personelden anket yontemi kullanilarak veriler elde edilmistir. Hipotezleri test etmek amaciyla hiyerarsik regresyon analizinden yararlanilmistir. Calismanin sonucunda, iliskisel psikolojik sozlesmede algilanan ihlalin, isten ayrilma niyetini artirici ve algilanan orgutsel destegi azaltici bir etkisinin bulundugu belirlenmistir. Islemsel psikolojik sozlesme algilanan ihlalin ise isten ayrilma niyeti uzerinde anlamli bir etkisinin bulunmadigi, fakat yalnizca islemsel sozlesmenin faydalar boyutunda algilanan ihlalin, algilanan orgutsel destegi azaltici bir etkisinin bulundugu tespit edilmistir.