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Coordination under the Shadow of Career Concerns

Author

Listed:
  • Koch, Alexander K.

    (Aarhus University)

  • Morgenstern, Albrecht

    (Federal Ministry of Finance)

Abstract
To innovate, employees need to develop novel ideas and coordinate with each other to turn these ideas into better products and services. Work outcomes provide signals about employees' abilities to the labor market, and therefore career concerns arise. These can both be 'good' (enhancing incentives for effort in developing ideas) and 'bad' (preventing voluntary coordination). Our model shows how the firm designs its explicit incentive system and organizes work processes to take these conflicting forces into account. The comparative statics results suggest a link between the increased use of teams and recent changes in labor market returns to skills.

Suggested Citation

  • Koch, Alexander K. & Morgenstern, Albrecht, 2009. "Coordination under the Shadow of Career Concerns," IZA Discussion Papers 4039, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4039
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    References listed on IDEAS

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    More about this item

    Keywords

    career concerns; knowledge work; reputation; teams; group incentives;
    All these keywords.

    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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