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  • 2020
  • Working Paper

Incentive Power and Knowledge Sharing Among Employees: Evidence from the Field

By: Wei Cai, Susanna Gallani and Jee-Eun Shin
There is consensus, both in the literature and in practice, about knowledge sharing within organizations being a key determinant of success. However, organizations struggle to sustain employees’ engagement in knowledge sharing. One challenge lies in the fact that,... View Details
Keywords: Organizational Knowledge Sharing; Employee Driven Innovation; Innovation Appropriability; Contract Design; High-powered Incentives; Low-powered Incentives; Incentives; Pay-for-Performance; Rank-and-file; Employees; Knowledge Sharing; Innovation and Invention; Motivation and Incentives; Creativity; Performance
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  • April 2014
  • Article

The Cost of High-Powered Incentives: Employee Gaming in Enterprise Software Sales

By: Ian Larkin
This paper investigates the pricing distortions that arise from the use of a common non-linear incentive scheme at a leading enterprise software vendor. The empirical results demonstrate that salespeople are adept at gaming the timing of deal closure to take advantage... View Details
Keywords: Incentives; Motivation; Compensation; Gaming; Sales Force Management; Motivation and Incentives; Salesforce Management; Software; Compensation and Benefits; Information Technology Industry
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  • March 2012
  • Article

The Incentive Bubble

By: Mihir Desai
The past three decades have seen American capitalism quietly transformed by a single, powerful idea—that financial markets are a suitable tool for measuring performance and structuring compensation. Stock instruments for managers, high-powered incentive contracts for... View Details
Keywords: Economic Systems; Financial Markets; Executive Compensation; Motivation and Incentives; Corporate Governance; Equality and Inequality; Human Capital; United States
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  • 18 Mar 2010
  • Working Paper Summaries

Matching Firms, Managers, and Incentives

Keywords: by Oriana Bandiera, Luigi Guiso, Andrea Prat & Raffaella Sadun
  • Mar 2012
  • Article

The Incentive Bubble

The past three decades have seen American capitalism quietly transformed by a single, powerful idea--that financial markets are a suitable tool for measuring performance and structuring compensation. Stock instruments for managers, View Details
  • 13 Aug 2012
  • Research & Ideas

When Good Incentives Lead to Bad Decisions

officers receive small rewards for loans that perform well and small penalties for loans that perform badly); and the high-powered incentive (in which officers receive big rewards for issuing loans that... View Details
Keywords: by Carmen Nobel; Banking
  • 2012
  • Working Paper

Earnings Management from the Bottom Up: An Analysis of Managerial Incentives Below the CEO

By: Felix Oberholzer-Gee and Julie Wulf
Performance-based pay is an important instrument to align the interests of managers with the interests of shareholders. However, recent evidence suggests that high-powered incentives also provide managers with incentives to manipulate the firm's reported earnings. The... View Details
Keywords: Compensation and Benefits; Interests; Business and Shareholder Relations; Motivation and Incentives; Earnings Management; Performance Evaluation; Stock Options
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  • April 2015
  • Article

Incentivizing Calculated Risk-Taking: Evidence from an Experiment with Commercial Bank Loan Officers

By: Shawn Cole, Martin Kanz and Leora Klapper
This paper uses a series of experiments with commercial bank loan officers to test the effect of performance incentives on risk assessment and lending decisions. We first show that while high-powered incentives lead to greater screening effort and more profitable... View Details
Keywords: Banking; Management Processes; Credit Products; Experimental Economics; Risk Management; Motivation and Incentives; Management Practices and Processes; Financing and Loans; Banking Industry
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  • 2016
  • Working Paper

Executive Compensation and Environmental Harm

By: Dylan Minor
We explore the relationship between managerial incentives and environmental harm. We find that high-powered executive compensation packages can increase the odds of environmental law breaking by 40%–60% and the magnitude of environmental harm by over 100%. We document... View Details
Keywords: Misconduct; Environmental Performance; Accounting Scandal; Sustainable Finance; Crime and Corruption; Corporate Social Responsibility and Impact; Executive Compensation; Environmental Sustainability; Corporate Governance
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    Incentivizing Calculated Risk-Taking: Evidence from an Experiment with Commercial Bank Loan Officers

    This paper uses a series of experiments with commercial bank loan officers to test the effect of performance incentives on risk-assessment and lending decisions. We first show that, while high-powered incentives lead to greater screening effort and more... View Details

    • 30 Aug 2012
    • Working Paper Summaries

    Incentivizing Calculated Risk-Taking: Evidence from an Experiment with Commercial Bank Loan Officers

    Keywords: by Shawn Cole, Martin Kanz & Leora Klapper
    • 30 Jan 2024
    • Research & Ideas

    ‘Intrinsic Joy’ Sparks Ideas Better than Cash

    Columbia University. When AI, open source, and incentives collide The findings have implications for any kind of innovation drive stemming from crowdsourcing, a method of gathering information from large groups that has been around for... View Details
    Keywords: by Rachel Layne; Technology
    • 24 Jul 2012
    • First Look

    First Look: July 24

    high-powered incentives lead to greater screening effort and more profitable lending, their power is muted by both deferred compensation and the limited liability typically enjoyed by credit officers.... View Details
    Keywords: Sean Silverthorne
    • February 2014 (Revised January 2024)
    • Case

    Go Mobile: Aligning District Managers and Store Teams

    By: Tatiana Sandino
    Indian cell phone retailer Go Mobile had implemented high-powered incentives to motivate its store employees to behave as owners and provide exceptional service. As the company scaled up, it faced multiple challenges in building a layer of district managers that were... View Details
    Keywords: Employee Relationship Management; Mobile and Wireless Technology; Growth Management; Organizational Design; Salesforce Management; Motivation and Incentives; Management Practices and Processes; Telecommunications Industry; India
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    • July–August 2019
    • Article

    Coupling Labor Codes of Conduct and Supplier Labor Practices: The Role of Internal Structural Conditions

    By: Yanhua Bird, Jodi L. Short and Michael W. Toffel
    Exploitive working conditions have spurred companies to pressure their suppliers to adopt labor codes of conduct and to conform their labor practices to the standards set forth in those codes. Yet little is known about whether organizational structures such as codes... View Details
    Keywords: Organization Theory; Economic Sociology; Social Responsibility; Sustainability; Auditing; Process Improvement; Organizational Structure; Corporate Social Responsibility and Impact; Supply Chain; Labor; Working Conditions
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    • 19 Sep 2012
    • Research & Ideas

    Book Excerpt: “The Architecture of Innovation”

    that have eschewed incentive compensation have had to face a steady stream of defections once the junior investors have mastered the venture process. After too many board meetings in which the corporate investor parks his Fiesta next to... View Details
    Keywords: by Josh Lerner; Financial Services
    • 25 Oct 2006
    • Op-Ed

    Fixing Executive Options: The Veil of Ignorance

    or possibly until they leave the firm. With Rawlsian options, managers would retain their high-powered incentives and know that large fractions of their wealth were invested in their companies. But they... View Details
    Keywords: by Mihir Desai & Joshua Margolis
    • 17 Jan 2012
    • First Look

    First Look: January 17

    of shareholders. However, recent evidence suggests that high-powered incentives also provide managers with incentives to manipulate the firm's reported earnings. The previous... View Details
    Keywords: Sean Silverthorne
    • 20 Feb 2008
    • First Look

    First Look: February 20, 2008

    incentives based on valuation ratios, split announcement effects, and future returns, we find empirical support for the predictions in both time-series and firm-level data. Given the strong cross-sectional relationship between... View Details
    Keywords: Martha Lagace
    • 20 May 2014
    • First Look

    First Look: May 20

    This case study explores organizational design and incentive choices related to building a middle management layer as a company scales up its operations. Go Mobile, an Indian mobile phone retailer, uses View Details
    Keywords: Sean Silverthorne