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Title:Dynamic incentives in organizations: Success and inertia PDF Logo
Authors:Ruckes, Martin
Rønde, Thomas
Issue Date:2010
Series/Report no.:Working paper series in economics 7
Abstract:We present a dynamic model in which an employee of a firm searches for business projects in a changing environment. It is costly to induce the employee who found a successful project in the past period to search for a new project. Past success can therefore result in profitreducing corporate inertia. Still, when the firm chooses to counteract the reluctance to search by increasing the power of the incentives, it stimulates initial search efforts and results in higher profits. Corporate restructuring and increasing the employee's authority over time are means to alleviate inertia but may undermine initial search incentives.
Subjects:incentives in organizations
inertia
innovation
restructuring
JEL:L2
M12
M54
O31
O32
Persistent Identifier of the first edition:urn:nbn:de:swb:90-206152
Document Type:Working Paper
Appears in Collections:Working Paper Series in Economics, Karlsruher Institut für Technologie (KIT)

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