control and performance of international joint ventures control is a critical concept for successful management and performance of international joint ventures ijvs this paper reviews and synthesizes prior studies addressing the conceptualization and operationalization of control within ijvs as well as the ijv control performance relationship the paper also presents a new conceptualization of ijv control as well as a conceptual frame work for studying control of ijvs

the crowding hypothesis and comparable worth although women s pay and occupational distribution have improved during the past few years it is still true that women earn considerably less than men and that their occupational distribution is substantially different because progress has been slow toward equality in the labor market some have called for a comparable worth policy proponents of this approach argue that occupational segregation contributes to the earnings disparity between women and men one theoretical justification for this position is the crowding hypothesis this paper first explains this theory and presents a method used to test its principal hypothesis it then describes an extension of this design for estimating the phenomenon that comparable worth policies address empirical studies conducted in this area are viewed and new findings are presented finally limitations of this analysis are discussed i introduction

agents of change or cogs in the machine reexamining the influence of female managers on the gender wage gap do female managers act in ways that narrow or instead act in ways that preserve or even widen the gender wage gap although conceptual arguments exist on both sides of this debate the empirical evidence to date has favored the former view yet this evidence comes primarily from cross establishment surveys which do not provide visibility into individual managers choices using longitudinal personnel records from an information services firm in which managers had considerable discretion over employee salaries we estimate multilevel models that indicate no support for the proposition that female managers reduce the gender wage gap among their subordinates consistent with the theory of value threat we instead find conditional support for the cogs in the machine perspective in the subsample of high performing supervisors and low performing employees women who switched from a male to a female supervisor had a lower salary in the following year than men who made the same switch

optimal collusion with internal contracting abstract in this paper two firms play an infinitely repeated bertrand game and each firm has an agent who produces the firm s output and holds private information about production costs the colluding firms fix prices and allocate market shares based on their agents information we develop a model of collusion in which firms use the presence of agents as a strategic opportunity to restrict their incentives to distort private information we show that such firm behavior may expand the scope of optimal collusion whether market allocation schemes are asymmetric or symmetric

executive compensation strategic competition and relative performance evaluation theory and evidence we examine compensation contracts for managers in imperfectly competitive product markets we show that strategic interactions among firms can explain the lack of relative performance based incentives in which compensation decreases with rival firm performance the need to soften product market competition generates an optimal compensation contract that places a positive weight on both own and rival performance firms in more competitive industries place greater weight on rival firm performance relative to own firm performance we find empirical evidence of a positive sensitivity of compensation to rival firm performance that is increasing in the degree of competition in the industry

the structure of the female male wage differential is it who you are what you do or where you work the efficacy of policies to narrow the malelfemale wage differential depends partly on the size of the portion s of the gap targeted previous research finds no between sex wage gap within occupations within employer job cell this is the first study to disentangle segregation by occupation from that based on employer or on job cell in five industries controlling for other forms of segregation occupational segregation produces a gap of 11 percent manufacturing to 26 percent services the wage gaps from establishment and job cell segregation are about 6 percent each since comparable worth acts on the occupation and job cell components it has a potentially large impact

strategic delegation by unobservable incentive contracts many strategic interactions in the real world take place among delegates empowered to act on behalf of others managers make strategic decisions that affect profits sales persons have power over setting prices and lawyers and sports agents represent their clients in bargaining processes one of the central messages of game theory is that this could be at least partly due to the strategic advantage delegation may provide to the delegating party the idea that signing binding and publicly observable contracts with a third party may serve as a beneficial commitment device goes back at least to schelling 1960 and has been put into use in many areas of economics 1 however the observability of contracts appears to be a precondition for them to play a commitment role and for this reason almost all applications of strategic delegation theory are couched in terms of observable contracts the formalization of this intuition is given by katz 1991 who showed that if contracts are unobservable then the nash equilibrium outcomes of a game with and without delegation coincide in particular delegation through unobservable contracts does not change the predicted outcome of games with a unique nash equilibrium these observations in turn call the empirical relevance of the applied delegation studies into serious question since in most real world transactions the signed contracts are unobservable to the outside parties however there are important strategic environments that fall outside the confines of katz s analysis first katz s model does not include the scenarios in which the outcome of the decision of delegating or not delegating is observable to the outside party in contrast in some models it is natural that the outside party observes the outcome of this decision simply because s he

strategic labour contracts labor contracts affect a firm s cost function and for this reason they can be used as a recommitment device to gain a strategic advantage against other firms in a model that is otherwise neutral it is found that if firms compete in prices then strategic considerations alone yield results similar to those obtained by c azariadis 1983 workers are underemployed and worse off in more adverse states of nature on the other hand if firms compete in quantities then the equilibrium contracts resemble those of j green and c kahn 1983 workers are overemployed and better off in more adverse states

responding to public disclosure of corporate social irresponsibility in host countries information control and ownership control we extend the internalization literature by theorizing on how public disclosure of corporate social irresponsibility csi can damage reputation based firm specific advantages of multinational companies mncs and how foreign subsidiary governance can subsequently be used as strategic responses specifically we distinguish between two foreign subsidiary governance mechanisms information control and ownership control that the prior literature has often assumed operate in parallel and posit that they function in divergent directions in this context furthermore we explain how two host country characteristics press freedom and regulatory quality amplify the need for mncs to utilize different governance mechanisms as responses to csi disclosure

multinational parent companies influence over human resource decisions of affiliates u s firms in mexico this study provides empirical evidence for the relationship between the degree of influence u s parent companies have over the human resource decisions of their mexican affiliates and the affiliates resource dependencies on the parent company both wholly owned and joint venture affiliates are examined resource dependence was the factor most closely related to parent influence over affiliate human resource decisions the importance of an affiliate to a parent company the nationality of affiliate managers and the type of ownership arrangements were also found to affect parent influence but to lesser extents than resource dependencies

subsidy and tuition policies in public higher education i introduction the much discussed and widely debated recent conditions in public higher education include expanding enrollments flat if not declining public appropriations per resident student and rapid increases in tuition rates 1 to many observers tuition policy in public higher education appears be explained as an attempt to set tuition at whatever level is necessary to compensate for shortfalls between public appropriations and instructional expenditures ehrenberg 2006 asserts that public higher education has been buffeted by a perfect storm in which state appropriations to public higher education institutions have failed to keep pace with per student expenditures in private higher education because of economic recession the priorities placed on alternative uses of state tax revenues such as elementary and secondary education medicaid welfare and criminal justice and efforts to reduce income and sales tax rates a considerable empirical literature examines the relationship between tuition in public higher education and state appropriations koshal and koshal 2000 identify a negative relationship between tuition and state appropriation a study of college costs and prices which is conducted by cunningham et al 2001 identifies an inverse association between tuition rates and annual budget appropriations but finds little evidence of a link between tuition and expenditures on instruction lowry 2001 treats state appropriations as exogenous in a resident tuition equation and discovers a significant negative relationship between state funding and tuition rizzo 2005 finds that increases in tuition are linked to declines in future levels of state funding which hints at a dynamic association rizzo and ehrenberg 2004 in one of the more extensive examination of the topic treat real state appropriations per student as an exogenous variable in their resident tuition equation and find that schools that receive higher state appropriations per student charge lower tuition though the elasticity is far from unity acknowledging the economic and demographic conditions of public higher education and the empirical literature linking appropriations and tuition raises a number of questions what activities are legislatures supporting when they allocate public funds to higher education what are the implied responsibilities for subsidizing residents versus nonresidents how are resident and nonresident tuition rates determined and what are the relationships among tuition rates resident and nonresident enrollments and state appropriations to higher education in particular there appears to be the need to develop a better understanding of the decision processes that determine both the public subsidy and the setting of tuition rates a goal of this article is to develop a conceptual framework for that process there is a widely held notion that residents should pay a lower tuition than nonresidents and as a result of a resident subsidy they do so in nearly all public universities one rationale for favorable treatment is that residents and their parents pay state taxes another claim which receives some support by groen 2004 is that residents are likely to remain in the state after graduation and thus contribute future tax revenues although the public subsidy to higher education is justified for these and many other economic development reasons some argue that the higher education subsidy is simply a payoff to special interest groups who influence legislatures and governors friedman 1968 and goldin and katz 1998 provide a general discussion of the objectives of subsidized higher education for whatever reasons resident students continue to receive a substantial publicfinanced subsidy while nonresidents pay close to full cost there are two basic arrangements for determining tuition rates in higher education 1 institutions determine tuition rates under the direction of an independent governing board and 2 state legislatures who are governed by statues and budget policies make tuition decisions

blind ambition the effects of social networks and institutional sex composition on the job search outcomes of elite coeducational and women s college graduates in this paper i develop a perspective on women s career attainment focused on how employers salary offers may be constructed based on their assumptions regarding women s access to comparative salary information therefore although the use of social networks in job search may enhance women s actual knowledge of prevailing wages i hypothesize that institutional characteristics that employers could assume to constrain women s networks and concomitant access to salary information will directly affect salary offers as well as moderating the influence of network ties on pay to test this perspective job search outcomes of women attending elite coeducational and women s colleges were examined regarding the number of offers obtained women who consulted with proportionally more male peer and employed adult male advice ties received significantly more job offers than women using fewer male advice contacts with regard to salary offers this study reveals an institutional sex composition effect women exiting single sex institutions i e women s colleges received significantly lower salary offers than women from coeducational schools even after accounting for human capital job characteristics and institutional reputation the effects of social networks on pay were moderated by institutional sex composition such that women exiting women s colleges received lower returns in the form of salary to their cross gender advice ties than did women from a matched coeducational institution implications of these results for theories of social capital and women s occupational attainment are discussed

coexistence of strategic vertical separation and integration abstract this paper gives conditions under which vertical separation is chosen by some upstream firms while vertical integration is chosen by others in the equilibrium of a symmetric model a vertically separating firm trades off fixed contracting costs against the strategic benefit of writing a two part tariff exclusive dealing contract with its retailer coexistence emerges when more than two vertical cournot oligopolists supply close substitutes when vertical integration and separation coexist welfare could be improved by reducing the number of vertically separating firms the scope for coexistence diminishes when assumptions on contract observability and commitment are relaxed

endogenous timing in contests with delegation i introduction contests with delegation where each player hires a delegate to expend effort or resources on the player s behalf to win a prize are common 1 an example is litigation between a plaintiff and a defendant in which each litigant hires an attorney who expends his effort to win the lawsuit on behalf of his client another example is a rent seeking contest in which each firm hires a lobbyist who expends his effort to acquire a monopoly or a procurement contract from the government on behalf of his client yet another example is a patent contest in which each firm hires a group of independent researchers or university professors who conduct research to obtain a patent on behalf of their employer delegation is attractive to players because they each can use superior ability by hiring a delegate with more ability than herself and achieve strategic commitments through delegation in such contests with delegation we believe delegates decide endogenously when to expend their effort after signing delegation contracts indeed pursuing their self interest the delegates may well endogenize the order of their moves and communicate it with each other before they expend their effort we believe also that players take it into account when designing their contracts for the delegates that the delegates will endogenize the order of their moves it is these ideas that motivate this paper accordingly the purpose of this paper is to systematically study contests with delegation in which delegates decide endogenously when to expend their effort after signing delegation contracts and before they expend their effort we study two player contests with delegation focusing on not only the equilibrium delegation contracts between players and their delegates but also the equilibrium orders of the delegates moves specifically we set up and analyze the following three stage game in the first stage two players each hire a delegate and they simultaneously announce their contracts written with their delegates each player s contract specifies how much her delegate will be paid if he wins the contest and how much if he loses it in the second stage each delegate decides when to expend his effort and the delegates announce their decisions simultaneously in the third stage the delegates expend their effort according to their decisions in the second stage to win the prize on behalf of their employers we show that in equilibrium the delegate hired by the higher valuation player chooses his effort level after observing his counterpart s and his expected payoff is greater than that of his counterpart this advantage of the delegate of the higher valuation player can be explained by the fact that his employer the higher valuation player offers better contingent compensation as it will be defined in section ii to him than the lower valuation player does to her delegate we compare the outcomes of the endogenous timing framework the three stage game presented above with those of the simultaneous move framework the game which is the same as the three stage game with the exception that the delegates choose their effort levels simultaneously and this order of their moves is given exogenously an interesting result is that each player offers her delegate a better contract in the endogenous timing framework than in the simultaneous move framework another interesting result is that unless the valuation for the prize of the higher valuation player is significantly greater than that of the lower valuation player then each delegate s expected payoff is greater in the endogenous timing framework than in the simultaneous move framework whereas each player s expected payoff is less in the endogenous timing framework than in the simultaneous move framework in summary pursuing their self interest the delegates decide endogenously when to expend their effort given contracts between the players and the delegates

corporate control of investments and management styles this article describes how corporate managers of major swedish groups in different industries exert control over investment requests and the direction of the investments of their groups the study

entry and managerial incentives abstract this paper presents a two period full information model of entry where owners of incumbent and entrant firms endogenously select the incentive schemes for their managers it is shown that when output decisions are delegated to managers the incumbent s owner chooses to base incentive schemes only partly on profit but if output decisions are reached via nash bargaining between managers the incumbent s owner will base the reward on profit alone the entrant never bases the incentive scheme solely on profit if there is a sufficiently high fixed cost of entry then the incumbent can deter entry by providing management with appropriate incentive schemes

corporate tax systems multinational enterprises and economic integration abstract multinational firms are known to shift profits and countries are known to compete over shifty profits two major principles for corporate taxation are separate accounting sa and formula apportionment fa these two principles have very different qualities when it comes to preventing profit shifting and preserving national tax autonomy most oecd countries use sa in this paper we show that a reduction in trade barriers lowers equilibrium corporate taxes under sa but leads to higher taxes under fa from a welfare point of view the choice of tax principle is shown to depend on the degree of economic integration

an empirical investigation of the relative performance evaluation hypothesis the principal agent framework has become a widely used paradigm in accounting and economics for analyzing issues in performance evaluation management control and the design of incentive systems while recent work in experimental economics has begun to examine empirically some of the underlying assumptions and implications of agency theory see baiman and lewis 1989 and kirby forthcoming few precise hypotheses have been tested using real world or naturally occurring data one exception has been the empirical investigation of the relative performance evaluation rpe hypothesis agency theory suggests that there are benefits associated with evaluating agents on the basis of their relative performances when the agents performances are affected by a common shock term e g see diamond and verrecchia 1982 and holmstrom 1979 1982 specifically a relative performance based contract can remove the common shock term from an agent s performance which enables a better evaluation of the agent s actions

explaining occupational sex segregation and wages findings from a model with fixed effects does segregation arise because female occupations have financial advantages for women planning to spend some time as homemakers as human capital theorists claim do male occupations have more onerous working conditions that explain their higher earnings as the neoclassical notion of compensating differentials suggests or do female occupations have low wages that are depressed by the sort of discrimination at issue in comparable worth as sociologists have argued to answer these questions the authors use a model with fixed effects to predict the earnings of young men and women from a pooled cross section time series of the national longitudinal survey analyses are undertaken for both blacks and whites a fixed effects model is useful for answering these questions because it corrects for the selection bias that results from the tendency of persons who differ on stable characteristics that are unmeasured but affect earnings to select themselves into different occupations the authors find little evidence that female occupations provide either low penalties for intermittent employment at high starting wages the advantages human capital theorists have argued them to have rather there is evidence of pay discrimination against men and women in predominantly female occupations implications for economic and sociological theories of labor markets are discussed authors

the impact of journals and authors on international business research a citational analysis of jibs articles in this paper we use citational analysis to examine the influence of individuals and disciplines on international business research we collected citational data over the ten year period 1984 to 1993 from every issue of the journal of international business studies we found that management economics marketing and finance disciplines have had significant influence on international business research and identified researchers such as dunning porter vernon casson rugman and hofstede as having made significant contributions to international business research

oligopoly profit sharing contracts and the firm s systematic risk abstract this article examines the properties of wage and profit sharing contracts in a model of oligopoly with capital market equilibrium while profit sharing contracts dominate market wage contracts profit sharing also reduces the firm s cost of equity capital under fairly broad conditions of oligopoly by enforcing lower costs in exchange for a pre determined share of cash flows to workers this form of operational leverage both reinforces the classical effect of market power on systematic risk and the impact of profit sharing on the corporate finance of the firm as previously suggested by ichino 1994 european economic review 38 1411 1422

gender earnings differentials in total pay base pay and contingent pay copyright by cornell university this is the publisher s version and is also electronically available from http ilr sagepub com content 47 4 634 abstract

stock options and the strategic use of managerial incentives in cournot based oligopoly models there is an incentive for firms to pursue overly aggressive behavior resulting in prices and profits below those of the cournot equilibrium compensating managers in proportion to a combination of profits and sales provides one mechanism through which aggressive behavior emerges however when the profit component of managerial compensation comes in the form of stock options the aggressive behavior is restrained or even eliminated in equilibrium this result relies only on the nonlinearity of the stock option generalizations to other forms of compensation are discussed copyright 1993 by american economic association

unraveling the mne wage premium whereas ib has extensively studied mnes generic positive impact on host economies but rarely on employee wages economics research has only shown an overall mne wage premium we unravel this premium considering multiple levels of analysis and accounting for host country contextual contingencies to unveil mnes different positive or negative distributional effects using unique micro level data from over 40 000 employees in 13 countries we examine mnes distributional effects for employees gender experience and immigrant status the influence of host country property rights protection and labor regulation and interplays with region and industry effects mnes distributional effects show marked differences that largely depend on the host country context and that are positive for experienced and foreign born employees in developed countries but negative for females working in developing countries whereas in developed countries the gender wage gap is smaller in mnes than in domestic firms as hypothesized we find evidence of a larger wage gap in developing countries the analysis also reveals that the higher host countries level of property rights protection the lower the mne wage premium our study points at the need to reassess statements about the generic positive impact of mnes in host countries particularly in developing countries and discusses further research implications

internalization advantage and subsidiary performance the role of business group affiliation and host country characteristics we extend internalization theory by examining the contingencies associated with market internalization and its impact on foreign subsidiary survival based on a sample of 6170 subsidiary year observations in 63 countries belonging to 292 mncs from korea during 1995 2013 we find that greater product and labor market internalization have weaker impacts on the survival of subsidiaries operating in countries with more developed institutional environments but stronger for subsidiaries of mncs affiliated with business groups the impact of business group affiliation is further dependent on host country institutional development and the diversification and size of the business group

strategic upfront marketing channel integration as an entry barrier abstract this paper investigates an organizational design problem concerning whether duopolistic firms competing in a product market should vertically integrate or separate their marketing channels in a dynamic noncooperative game setting previous operational research models have shown that the separation of the marketing channel with the adoption of a two part tariff contract is the dominant strategy compared with integration for each firm if the two firms face retail price competition and thereby constitutes the subgame perfect nash equilibrium spne contrary to this previous insight this paper demonstrates that if exogenous parameters that characterize fixed costs product substitutability and a demand function fall into a specific region marketing channel integration dominates the separation strategy when one of the two firms is the incumbent firm while the other is a potential entrant in other words the well known result in the price setting game can be reversed when we take entry threats into consideration specifically we show that upfront vertical integration of the marketing channel enables the incumbent to deter the entry of the potential competitor and to monopolize the market in the spne this result has operational implications for a firm confronting the threat of potential rivals entering the market in that the firm can use this apparently inferior strategy as a commitment device which creates a virtual entry barrier

the strategic value of partial vertical integration we investigate the strategic incentives for partial vertical integration namely partial ownership agreements between manufacturers and retailers when retailers privately know their costs and engage in price competition with differentiated goods the partial misalignment between the profit objectives within a partially integrated manufacturer retailer hierarchy implies a higher retail price than under full integration this information vertical effect translates into a competition horizontal effect the partially integrated hierarchy s commitment to a higher price induces the competitor to increase its price which strategically relaxes competition our analysis provides implications for vertical merger policy and theoretical support for the recently documented empirical evidence on partial vertical acquisitions

control changes in multinational corporations adjusting control approaches in practice the issue of control in multinational corporations mncs is central to international business scholarship however prior literature tends to provide a static perspective offering few theoretical insights on control changes especially the practices that enable control adjustments adopting a practice theory perspective we consider control as in the making whereby adjustments emerge through a social accomplishment constituted and reconstituted as headquarters and subsidiaries engage in a co creating process using a longitudinal case study approach we had the rare opportunity to track and compare an unsuccessful and a successful attempt to adjust control in an mnc over time our main theoretical contribution is a model of adjusting control in mncs that details the practices that enable control changes this model offers theoretical implications for organizational control theory in mncs especially in relation to theorizing the subsidiary contribution in the design of control the reconciliation of raised tensions in headquarters subsidiary relationships and the nature of unintended consequences in the adjustment process our study also contributes to theories on mnc change as it details the construction of an ongoing strategy structure alignment for strategic flexibility

new frontiers in international strategy this paper studies a new frontier in the understanding of international strategy is to explore it we propose the analogy of the ecology of firms and places as a way to emphasize that the real problem is the colocation of different places with different types of firms locations are in fact the distinctive content of international business strategy we deal with this problem with four different perspectives first differences across countries must be addressed with integrative frameworks able to represent the multidimensionality of semiglobalization or intermediate states between total localization and total integration second differences in the development of intermediary markets in a particular place influence firm positioning and industry structure in that place but their impact also crosses different places and it is endogenous to the ecology of places and firms in a systemic integrative way that makes simplifications extremely risky in the design of competitive strategy in an international context third places firms and strategies form a complex ecology that can be studied with a framework focused in understanding the geography strategy link that incorporates different levels of analysis new economic actors and a set of primitives finally firms around the ecology of places face the challenge of developing strategies and business models to serve the majority of humanity today excluded from world trade it is a fundamentally different way to think about the ecology of places and firms overall we present an intriguing new frontier with the capacity to impact both research and practice in the field of international strategy based in understanding the interplay among firms and places

an empirical analysis of the integration responsiveness framework in global industries in this study businesses competing in global industries were categorized into three groups according to the integration responsiveness framework for conceptualizing industry pressures confronting business competing internationally using this framework contextual conditions associated with each group were examined competitive attributes distinguishing each group were then identified to clarify alternate business level strategies for competing within a global industry context beyond providing additional insight into the nature of competition in global industries several broad extensions to the integration responsiveness framework are suggested

once in the door gender tryouts and the initial salaries of managers although women pursue managerial credentials at nearly the same rate as men gender disparities in wages exist because of the shortfall in wages women sustain relative to men at the onset of their careers this article develops a tryout approach to test for the presence of demand side contributions to initial wage inequality while also developing and testing theory on why it may be lessened through internships using detailed data on graduates from an elite management program from 2009 2010 our analyses reveal that internships are associated with the gap in men s and women s initial salaries for men there is no difference in salary offers from employers where an internship occurs versus one where an internship does not occur however women receive higher salaries from employers where an internship first takes place this paper was accepted by olav sorenson organizations

delegating pricing decisions an outstanding problem in marketing is why some firms in a competitive market delegate pricing decisions to agents and other firms do not this paper analyzes the impact of competition on the delegation decision and in turn the impact of delegation on prices and incentives the theory builds on the simplest framework of competition in two dimensions prices and sales agents effort specifically we are interested in answering the following questions 1 does competition affect the price delegation decision and if yes why 2 how do prices vary under price delegation and no price delegation scenarios 3 do the incentives to the sales representatives vary under the delegation and no delegation scenarios to address these issues we build a game theoretic model that consists of two firms selling through their sales representatives these representatives are company employees sales are a function of prices and selling efforts the risk neutral firms decide whether or not to delegate the pricing decision to risk averse sales representatives the wages to the sales representatives consist of salary plus a commission on gross margins the commission on gross margins can be adjusted either through communicated marginal cost of production which we call virtual marginal cost or directly the firm and the sales representative are assumed to have the same information about the market that is there is no information asymmetry with competition in two dimensions the strategic nature of decision variableprice depends on the relative intensity of competition with unobservable contracts and risk averse sales representatives firms delegate the pricing decision when price competition is intense part of the uncertainty in demand is absorbed by the firm by keeping virtual marginal cost greater than the marginal cost of production the competing firm infers this through the risk aversion of the sales representatives under price delegation the sales representatives wages are higher and they set a price that is higher than what the firms would have set themselves this leads to softening of price competition that is to the advantage of both firms when the effort competition is dominant however the firms prefer to make the pricing decision themselves because this reduces the intensity of effort competition among agents a single instrument commission structure in which the firms adjust the virtual marginal cost is compared to a two instrument commission structure in which the firms can adjust the commission rate as well the virtual marginal cost under no price delegation the two incentive schemes are the same however under price delegation the risk premium with the two instrument scheme is lower however the prices and efforts are higher with the single instrument scheme when price competition is intense the increase in risk premium with the single instrument scheme is more than compensated for by the increase in profits this is the benefit of softening price competition through higher prices

strategic union delegation and strike activity we develop a model of wage determination with private information in which the union has the option to delegate the wage bargaining to either surplus maximizing delegates or to wage maximizing delegates such as senior union members we show that the wage outcome in case of surplus maximizing delegates is not necessarily smaller than the wage outcome in case of wage maximizing delegates even when the wage bargaining with private information is close to one with complete information however if it is commonly known that the union is stronger than the firm and the demand is sufficiently elastic then delegating to wage maximizing delegates definitely increases the wage at equilibrium the maximum delay in reaching an agreement is greater whenever the union chooses wage maximizing delegates instead of surplus maximizing delegates and remains finite even when the period length shrinks to zero

stackelberg equilibria in managerial delegation games abstract managerial compensation packages do not only influence managers behavior but also have an impact on competing firms in a managerial delegation game investigating the latter aspect it is shown that the inherent prisoner s dilemma situation can be resolved without changing the normally studied setup or timing in the first stage owners choose an incentive function for their managers in the second stage they choose the weights assigned to that function besides profits and in the third stage managers play a cournot game solving this continuous optimization problem with the implicit function theorem shows that choosing an incentive from the set of multiplicative incentives i e any generalized affine transformation of the product of both firms quantities which includes e g relative profit ensures that the stackelberg outcome is among the set of equilibrium outcomes furthermore it is the unique outcome if the rival owner opts for one of the well known incentives like sales revenue or market share the general approach used allows demonstrating that with no other linear incentive a stackelberg outcome results and that incentives like profit to cost ratio should be avoided selecting a multiplicative incentive is a dominant strategy of the game

overconfidence compensation contracts and capital budgeting a risk averse manager s overconfidence makes him less conservative as a result it is cheaper for firms to motivate him to pursue valuable risky projects when compensation endogenously adjusts to reflect outside opportunities moderate levels of overconfidence lead firms to offer the manager flatter compensation contracts that make him better off overconfident managers are also more attractive to firms than their rational counterparts because overconfidence commits them to exert effort to learn about projects still too much overconfidence is detrimental to the manager since it leads him to accept highly convex compensation contracts that expose him to excessive risk

endogenous market structures and contract theory delegation principal agent contracts screening franchising and tying abstract i study the role of unilateral strategic contracts for firms active in markets with price competition and endogenous entry traditional results change substantially when the market structure is endogenous rather than exogenous they concern 1 contracts of managerial delegation to non profit maximizers 2 incentive principal agent contracts in the presence of moral hazard on cost reducing activities 3 screening contracts in case of asymmetric information on the productivity of the managers 4 vertical contracts of franchising in case of hold up problems and 5 tying contracts by monopolists competing also in secondary markets firms use always these contracts to strengthen price competition and manage to obtain positive profits in spite of free entry

the strategic choice of managerial incentives do firms with separate owners and managers maximize profits we address this question for an oligopoly where managers compete in quantities or prices as in the cournot or bertrand models and owners choose their managers incentives we find that there is a strategic aspect in the problem of selecting incentives and that profit maximizing behavior does not result in particular in the oligopoly we study the behavior of firms competing in quantity price more closely resembles perfectly competitive collusive behavior than cournot bertrand behavior

the commitment value of contracts under dynamic renegotiation we examine why different renegotiation processes can lead to opposite results regarding the commitment value of third party contracts in the presence of asymmetric information our main result is that a contract loses all strategic value if renegotiation is allowed during the production stage rather than only before production begins this result casts serious doubt on the relevance of previous findings which emphasize how contracts can have commitment value even in the presence of renegotiation our analysis can also be used to understand the differences between many of the results in the renegotiation literature

equilibrium contingent compensation in contests with delegation we consider two player contests in which each player hires a delegate who expends his effort to win a prize on the player s behalf endogenizing delegation contracts we focus on the equilibrium contracts between the players and their delegates we first show that each player s equilibrium contract is a no win no pay contract then we examine the delegates equilibrium compensation spreads effort levels probabilities of winning expected payoffs and the players equilibrium expected payoffs we show that economic rents for the delegates may exist

patterns of strategic control within multinational corporations the management of multinational operations is often required to balance conflicting priorities between responsiveness at the national subsidiary level and central coordination for global competitiveness such balancing requires that relevant data be brought to bear on decisions that consensus be created among key managers and that relative power among them be carefully balanced in large complex mncs the balancing process can be institutionalized through the structuring of relationships between headquarters and subsidiaries

market seeking mnes in an emerging market how parent subsidiary links shape overseas success this study extends research on parent subsidiary links applying new theoretical perspectives those of resource dependence and dynamic capability to the new empirical setting of an emerging market we suggest that parent subsidiary links help to mitigate emerging market threats by reducing external dependence and help to capitalize on emerging market opportunities by enhancing local responsiveness

monitoring of workers and product market competition the role of works councils i introduction technological advancement allows firms to closely monitor their workers actions more than ever before for instance firms can acquire worker monitoring software to monitor activities on computers or cell phones such software enables firms to assess whether workers play games on their computers or surf the internet instead of working productively and even to track workers exact locations similarly firms scan emails or use video surveillance to monitor their workers behavior unsurprisingly the growing use of monitoring technologies has led to a debate on how closely firms should be allowed to monitor their workers actions and on whether government intervention is needed to protect workers privacy at first sight it appears that this debate centers around two different kinds of arguments economic arguments e g higher worker productivity in favor of extensive worker monitoring against ethical issues according to which workers privacy must be protected schmitz 2005 however demonstrates that this is not necessarily true in a contract theoretical model he finds that firms employ monitoring technologies not to increase efficiency but rather to reduce rents that must be paid to the workers in the case of imperfect monitoring he concludes that monitoring technologies may lead to inefficiencies and thus calls for laws protecting workers privacy whereas worker protection in the united states is rather weak in this respect it is typically stronger within the european union in germany for instance works councils are important institutions that provide workers with power on the firm level particularly with respect to working conditions within the system of co determination works councils have legally guaranteed influence on management decisions concerning working conditions within a firm for instance the law prescribes that worker representatives must consent to any introduction of technologies that monitor the workers effort and output 1 given these rights of works councils it may be puzzling that firm owners do not more strongly oppose this limitation of their control rights in this paper we offer an explanation to resolve this puzzle by analyzing the interaction between internal organization and market conduct we argue that works councils and their right to block monitoring of workers can act as a commitment device of firms to mitigate product market competition as relaxed competition increases profits and because workers receive an information rent from their co determination rights workers and firms have aligned interests in establishing works councils at the expense of consumers we derive these results in a simple model of two competing firms where each firm faces a moral hazard problem with its workforce that could be solved by installing a monitoring technology without monitoring inducing high effort by workers is more costly as a result effort levels will be lower and so will be output this may serve a similar purpose as quantity reduction in a cartel and it may thereby increase firm profits 2 however similar to quantity reduction in a cartel also with respect to monitoring there is a danger that a single firm deviates and installs the monitoring technology consequently the deviator can produce higher output more cheaply and free rides on the lower output of its competitor thus firms would like to ex ante commit not to use a monitoring technology usually no such commitment is possible however works councils may serve this unintended purpose because they must give their consent to monitoring technologies this provides them with a property right on the information rent arising in case of nonmonitoring to receive their consent the firm must offer the workers compensation for the foregone rent this additional cost of monitoring makes deviation from a nonmonitoring situation less attractive implying that works councils may serve as the desired commitment device

profit sharing with workers facilitates collusion among firms we show how profit sharing by firms with workers facilitates collusion among firms in a dynamic oligopoly environment with uncertain demand we first show that firm profits can always be increased by tying wages to market conditions the optimal agreement takes the form of an option and features partial sharing because increased sharing raises the expected price wage differential but reduces price wage variability we then show that given any cartel there exist market conditions such that simply giving some expected profit to workers raises expected firm profits via the transfer s impact on the incentive to cheat on the cartel

the evolution of research on coordination mechanisms in multinational corporations the mechanisms of coordination used by multinational corporations mncs are studied through an exhaustive literature review a pattern of evolution is found as time has passed researchers have concentrated more on subtler and informal mechanisms abandoning their unidimensional focus on structural issues it is suggested that the increase in the study of those mechanisms may be due among other reasons to the fact that mncs are indeed making more use of them that could be explained by changes in the international competitive environment which force firms to adjust their strategies requiring ever more multidimensional coordination

markets in hierarchies organizational and market influences on gender inequality in a state pay system a pivotal issue in sociological theories of labor markets as well as legal and policy debates on pay equity is the relative importance of market and organizational forces in determining pay differences between jobs held predominantly by men and those held predominantly by women this article develops two models of the market organization relationship an administered efficiency model and a bureaucratic politics model quantitative analyses of individual and job level data in a state government pay system indicate that the administered efficiency model does not adequately explain malefemale earnings differences documentary testimonial and interview data strongly suggest the significance of bureaucratic politics in the pay determination process we conclude that market forces influence wage rates but are heavily mediated by organizational factors unrelated to efficiency considerations in the type of organization studied here

accounting for the gap a firm study manipulating organizational accountability and transparency in pay decisions great progress has been made in documenting how employer practices may shape workplace inequality less research attention however has been given to investigating which organizational strategies are effective at addressing gender and racial inequality in labor markets using a unique field study design this article identifies and tests for the first time whether accountability and transparency in pay decisions two popular organizational initiatives discussed among scholars and practitioners may reduce the pay gap by employee gender race and foreign nationality through a longitudinal analysis of a large private company i study the performance based reward decisions concerning almost 9 000 employees before and after high level management adopted a set of organizational procedures introducing accountability and transparency into the company s performance reward system before such procedures were introduced there was an observed gap in the distribution of performance based rewards where women ethnic minorities and non u s born employees received lower monetary rewards compared with u s born white men having the same performance evaluation scores and working in the same job and work unit with the same manager and the same human capital characteristics analyses of the company s employee performance reward data after the adoption of accountability and transparency procedures show a reduction in this pay gap i conclude by discussing the implications of this study for future research about employer strategies targeting workplace inequality and diversity

herding in delegated portfolio management when is comparative performance information desirable abstract we address the issue of investors asset allocation decisions when portfolio management is delegated to an agent contrary to predictions from traditional financial theory it is shown that investors may not induce their manager to allocate funds to the asset with the highest return instead they may herd in their asset allocation decision and induce trade in a particular asset because another manager is trading in it and despite the presence of a more profitable alternative doing so allows investors to write an efficiency improving relative performance contract on the other hand herding leads investors to design wage contracts strategically resulting in more aggressive and thus less profitable trade in equilibrium we show that herding occurs when the cost of information is high information precision is low and when managers are sufficiently risk averse moreover when investors can decide whether or not to disclose information about their manager s performance they will not do so

how to compete cournot versus bertrand in a vertical structure with an integrated input supplier we study whether a quantity or a price contract is chosen at equilibrium by one integrated firm and its retail competitor in a differentiated duopoly using a similar vertical structure arya et al 2008 show that bertrand competition is more profitable than cournot competition which contrasts with conventional wisdom in this article we first demonstrate that such a result is robust to the endogenous determination of the type of contract second by introducing managerial incentives in the model we find that delegation to managers may lead each firm to choose a quantity contract and as long as products are sufficiently differentiated entails conflicting choices causing nonexistence of equilibrium in pure strategies significantly high product substitutability reconciles firms objectives under delegation leading unique or multiple equilibria with symmetric types of contracts to arise

on intrabrand and interbrand competition the strategic role of fees and royalties abstract we examine oligopolistic markets with both intrabrand and interbrand competition we characterize equilibrium contracts involving a royalty or wholesale price and a fee when each upstream firm contracts with multiple downstream firms royalties control competition between own downstream firms at the expense of making them passive against rivals when the number of downstream firms is endogenous each upstream firm chooses to have only one downstream firm this result is in sharp contrast to previous literature where competitors benefit by having a larger number of independent downstream firms under only fixed fee payments we discuss why allowing upstream firms to charge per unit payments in addition to fixed fees dramatically alters their strategic incentives

not just a formality pay system formalization and sex related earnings effects drawing on neoclassical economic internal labor market and devaluation theories we examine how the sex composition of jobs and the sex of individual workers affect earnings depending upon the formalization of the pay type using personnel data for over 8 000 employees we confirm the existence of a negative relationship between earnings and the proportion female in a job we also find that for less formalized pay types cash incentive bonuses sex composition and individual sex effects are larger than for more formalized pay merit raises and base salary together these findings support devaluation explanations suggest that incentive bonuses may widen the earnings gap between women and men and have implications for the design of pay structures in organizations

subsidiary autonomy the case of multinational subsidiaries in malaysia this paper argues that the nature and extent of the benefits that fdi confers on host economies depends in part on the degree of autonomy enjoyed by subsidiary management survey evidence of multinational subsidiaries in malaysia indicates that the autonomy conferred on local management is limited even where subsidiary management categorise their organisations as decentralised their autonomy is limited to local operational matters in general the more integrated the subsidiaries in the global activities of the parent the less their autonomy which implies limits to their contribution to the malaysian economy

separate and unequal occupation establishment sex segregation and the gender wage gap the authors report the first large scale empirical investigation of within job wage differences between men and women in the same occupation and establishment using data first on blue collar and clerical employees from 16 u s industries in 1974 83 and second on employees in 10 professional and administrative occupations the authors report three findings first wage differences at the occupation establishment level were small even without controls for individual level characteristics hence within job wage discrimination was much less important than occupation establishment segregation for observed wage differences second establishment segregation was an important cause although not as important as occupational segregation of wage differences third establishment segregation was extensive as was occupational segregation

a comparative analysis of the strategy and structure of united states and australian corporations an analysis of the environments of leading manufacturing firms operating in the united states and in australia produced a series of hypothesized differences in the strategies organization structures and market environments of firms in the two countries parallel hypotheses about differences between domestic australian firms and subsidiaries of foreign multinationals operating in australia were also developed

should multiproduct firms provide divisional or corporate incentives abstract this paper points out some of the implications of the internal organization of a multiproduct firm for its market conduct in particular we study the strategic use of organizational forms based on corporate incentives versus forms based on divisional incentives the equilibrium internal organization is determined in a model with full information it is shown that firms provide corporate incentives when goods are substitutes and divisional incentives when goods are complements and the result holds both in the case of quantity setting and price setting

cumulative gender disadvantage in contract employment women s wages do not grow with experience or tenure as much as men s do many accounts of this cumulative gender disadvantage attribute it to women s underinvestment in firm specific skills yet if that were true this disadvantage would not exist where firm specific skills are not rewarded by the labor market this article investigates this argument in the context of contract employment where demand for firm specificity is minimal contrary to expectations men still receive higher rewards than women over time drawing on quantitative evidence and qualitative fieldwork using job histories of high skill contractors affiliated with a staffing firm the author finds support for two sources of women s disadvantage lower rates of movement across clients on the supply side and unmeasured demand side factors by which similar levels of tenure and client transitions accrue lower rewards to women implications for research on gender stratification and career advancement in nonformalized labor markets are discussed

what happened to the transnational the emergence of the neo global corporation bartlett and ghoshal s transnational solution for managing the mnc remains popular among scholars and practitioners alike however our in depth qualitative study of unilever an exemplary case of a transnational found that in the period 2000 2012 the company evolved into a very different organizational form with a distinct set of characteristics we call this the neo global corporation in explaining how and why this transformation occurred we turn to organizational evolutionary theory and use our case to generate a multi cycle process model of mnc evolution given the dynamism of the mnc and its environments we anticipate that the neo global will also eventually transform and call for more organization level case studies of mncs in future international business research

the elementary economics of social dilemmas a social dilemma is in essence a prisoners dilemma in a continuous strategy space i discuss a number of social dilemmas that have caught my attention offer an elementary diagrammatic synthesis of them and discuss some of the economic insights that the diagrams capture including incentives for pre commitment finally i model pre commitment via delegation and link results to the literature on the evolution of preferences l economie elementaire des dilemmes sociaux un dilemme social est essentiellement un dilemme du prisonnier dans un espace continu de strategie l auteur discute d un certain nombre de dilemmes sociaux qui ont retenu son attention il en propose une synthese graphique elementaire et discute certaines des suggestions economiques qui decoulent de ces diagrammes comme par exemple les incitations a se pre engager finalement l auteur construit un modele de pre engagement par delegation et relie ses resultats a la litterature sur l evolution des references

offshoring innovation to emerging markets organizational control and informal institutional distance the literature on innovation offshoring has focused on the dichotomous choice between two distinct investment strategies captive offshoring and outsourced offshoring we use the concept of organizational control to investigate how differences in the informal institutions that prevail in the home and host countries influence multinational enterprise mne strategy or the organizational control decision with respect to subsidiaries established to offshore innovation while the relationship between formal institutions and mne strategy has been the subject of considerable academic scrutiny less is known about the role of informal institutions we propose that the type of uncertainty precipitated by informal institutions is critical to understanding the strategic behavior of foreign investing mnes we hypothesize that an mne s organizational control over a subsidiary will be contingent upon the type of informal institutional uncertainty encountered by the subsidiary more specifically we disaggregate the informal institutions construct and develop three new more explicit latent constructs behaviorally oriented informal institutions boii technology oriented informal institutions toii and demand oriented informal institutions doii our theory posits that while an increase in boii distance will precipitate a preference for greater organizational control heightened toii and doii distances will induce the opposite outcome a preference for lower levels of organizational control