Incentives for innovation and centralized versus delegated capital budgeting

• 成果类型: Article
• 署名作者: Dutta, Sunil; Fan, Qintao
• 署名单位: University of California System; University of California Berkeley
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2012.01.003
• 发表日期: 2012
• 关键词: intrafirm resource-allocation; asymmetric information; ORGANIZATIONAL SLACK; moral hazard; decentralization; DESIGN; firm; RESPONSIBILITY; COMPENSATION; PERSPECTIVE

摘要

We study a setting wherein a divisional manager undertakes personally costly effort to improve the profitability of an investment project. The manager's choice of innovation effort is subject to a holdup problem because of the ex post opportunism on the part of headquarters. We analyze and contrast the performance of centralized and delegated forms of investment decision-making. We find that delegation improves the manager's innovation incentives. We identify conditions for each of the two organizational forms to emerge as the optimal choice, and relate these conditions to characteristics of firms' investment opportunity sets. (c) 2012 Elsevier B.V. All rights reserved.