Managerial Delegation Theory Revisited

This article challenges the results of the ‘classical’ managerial delegation literature, where it is assumed that the weight of the managerial bonus only depends on the owner's will to maximise his own profits. By considering sales (S) (resp. relative profit (RP)) contracts, the received literature has found that (S,S) (resp. (RP,RP)) is the unique pure‐strategy sub‐game perfect Nash equilibrium in a game that contrasts S (resp. RP) with pure profit maximisation (PM). This article shows that none of the previous results may hold when the owner negotiates about managerial compensation with his manager. Copyright © 2016 John Wiley & Sons, Ltd.     

Cooperation with a multiproduct corporation in a strategic managerial delegation

We consider an industry composed of a multiproduct corporation that adopts corporate social responsibility (CSR) as a strategic managerial delegation and examine the profit-incentive to form a cooperative group. We find that competition is an equilibrium for any degree of substitutability and yields the highest CSR, which is increasing in the degree of substitutability. We also show that full cooperation is an equilibrium for lower substitutability but induces no CSR, whereas partial cooperation with one uniplant firm is an equilibrium for higher substitutability but yields lower CSR than that under competition. Therefore, cooperation might reduce strategic CSR activities, whereas competition will encourage higher CSR but yield lower industry profits.     

Optimal zoning of managerial duopoly

This paper investigates optimal zoning of two managerial firms in an unconstrained linear city. Comparing with the case in which firms are not managerial type, the strategic delegation increases the incentives of one firm to locate farther from the rival. Then, a welfare function is introduced to highlight zoning regulation as an influential competition policy tool. Depending on the regulator's objective function and the timing of location choice, we provide a new mechanism that allows the regulator to attain the optimal locations of managerial firms and can lead to strong or weak competition.     

A Note on Managerial Delegation with Asymmetric and Convex Costs

In this note, we investigate if the standard result by the managerial delegation literature, i.e., the sub‐game perfect Nash equilibrium is not Pareto‐optimal from the firms' viewpoint, still applies when asymmetric and convex costs are introduced into the analysis. In such a framework, the managerial delegation choice still represents a sub‐game Nash perfect equilibrium, but the more efficient firm may obtain higher profits provided that the degree of cost asymmetry between firms is sufficiently large. Copyright © 2015 John Wiley & Sons, Ltd.     

Who is more aggressive under vertical product differentiation?

In this paper, we introduce quality differences in vertical market and compare the managerial delegation contracts of downstream firms. We find that the owner of a downstream firm that produces low-quality products induces the manager to behave more aggressively when the marginal cost coefficient is low. While when marginal cost coefficient is high, the owner of a downstream firm that produces high-quality products induces the manager to behave more aggressively. It is further found that managerial delegation can improve the profits of downstream firms but reduce the consumer surplus and social welfare.     

Price versus Quantity in a Duopolistic Market with Bargaining over Managerial Delegation Contracts

This paper studies the endogenous choices of strategic contracts in a duopoly with bargaining between the owner and manager of each firm over the content of the managerial delegation contract. We show that when the bargaining power of the manager relative to that of the owner within each firm is sufficiently high, quantity competition based on the quantity contracts chosen by the owners of both firms can be uniquely observed in the equilibrium, whereas quantity competition and price competition can be observed in the equilibrium when this relative bargaining power is sufficiently low. Copyright © 2015 John Wiley & Sons, Ltd.     

Artifacts that organize: Delegation in the distributed organization

A great deal of research on geographically distributed organizing focuses on communication among members; however, in the face of increasingly large, complex and interdependent infrastructure, scholars must also examine instances of technology-supported coordination that function by replacing rather than enhancing human communication among organizational members. Central to this are complex processes of delegation — in which organizational work and agency are passed back and forth across the shifting line between “social” and “technical” elements. Building on work in the sociology of science, this paper extends the concept of delegation and applies it to thorny questions around the work of sustaining organization over time. We explore two examples from the Open Science Grid (OSG), an initiative that distributes computational resources to geographically dispersed and otherwise loosely coordinated research teams. Our first case is one of successful delegation, as automated access to resources is extended to a new group of distributed scientists. We then turn our attention to a case where the process of delegation breaks down, revealing the usually invisible work needed to sustain “seamless” integration. As these cases show, delegation is complex, fragile, and central to the nature of contemporary organizing. Specifically, delegation: 1) reconfigures the organization of work; 2) transforms how outcomes are accomplished; 3) redistributes responsibility for organizational decision-making; and 4) shifts the visibility and invisibility of both actors and their work.     

Endogenous timing of managerial delegation contracts in a unionized duopoly

In a multiple‐stage duopoly game with strategic delegation and unionized labor market, this paper analyzes whether firms' owners decide managerial incentive contracts sequentially or simultaneously. When firms compete in quantities, firms' owners can choose incentive contracts simultaneously or sequentially, depending on the unions' relative bargaining power and the degree of product differentiation. Instead, when firms compete in prices, firms' owners set incentive contracts sequentially with substitute goods and simultaneously with complement goods.     

Managerial Delegation Contracts under Centralized Unionization

This paper studies how alternative managerial delegation contracts in a duopoly product market interact with wage decisions taken by a central (industry‐wide) union in the labor market. Interestingly, results prove to be more varied with respect to findings by the managerial delegation literature with exogenous production costs. Most notably, it is pointed out that, in equilibrium, both firm profitability and welfare outcomes can be superior under both sales delegation and relative profit delegation, depending on various factors such as the degree of product differentiation and the competition regime. Copyright © 2013 John Wiley & Sons, Ltd.     

The Bargaining–sales‐delegation Game

This article revisits the managerial delegation literature led by Vickers ( 1985 ), Fershtman and Judd ( 1987 ) and Sklivas ( 1987 ) by introducing a bargaining mechanism between owners and managers over managerial contracts. It shows that the degree of bargaining interacts with the extent of product differentiation in determining whether the sub‐game perfect Nash equilibrium is sales delegation or profit maximisation. In contrast with the classical result, no sales delegation emerges and the typical prisoner's dilemma of the managerial delegation literature is solved. This holds in both contexts of Cournot and Bertrand rivalries. The article also provides results for the more general cases with heterogeneous managerial bargaining power and endogenous decisions of the owners regarding the bargaining power of the manager that should be or not be hired in a firm. Copyright © 2016 John Wiley & Sons, Ltd.     

R&D spillovers and strategic delegation in oligopolistic contests

Considering oligopolistic contests with R&D spillovers and strategic delegation three results can be obtained: (1) There exist multiple asymmetric equilibria where one owner highly favors sales as a basis for his manager's incentives which drives the other firm out of the market. (2) If R&D spillovers are zero, a managerial firm will have a strong strategic advantage when competing with an entrepreneurial firm. If both owners endogenously decide about delegation, each owner's dominant strategy will be to delegate, given that the manager's reservation value is not too large. (3) If R&D spillovers are maximal, collusive market outcomes become very likely, which makes strategic delegation less important. Copyright © 2004 John Wiley & Sons, Ltd.     

Managers and Wage Policies

Do individual top managers matter for wages and wage policies? Are there general differences in “style” among managers with respect to worker compensation? To shed light on these questions, we exploit a large panel dataset from Portugal that allows us to match workers, firms, and managers, and follow the movements of the latter across different firms over time. While accounting for the effect of worker and firm heterogeneity, we estimate the role of top manager fixed effects in determining wages and wage policies. The estimates suggest that (i) top managers have a significant influence on wages and wage policies; (ii) there exists different managerial “styles”; and (iii) managers’ (observable) attributes matter for worker compensation.     

Agency costs and corporate philanthropic disaster response: the moderating role of women on two-tier boards – evidence from People's Republic of China

Prior research evidence shows that strategic and managerial utility motivation explains corporate philanthropic contribution efficiently in western countries. An important question arises, however, regarding whether the corporate philanthropic contribution model is equally appropriate for all types of corporate social responsibility (CSR) (e.g. donation) in all business settings (e.g. Chinese listed firms' philanthropic responses to disaster). In this paper, we consider the unique two-tier board structure of Chinese listed firms and argue that firms with women on the board of directors (BOD) and the supervisory board (SB) are able to challenge this model. Data collected from Chinese listed firms' philanthropic responses to disaster extended the finding that the agency theory with moderators explains corporate philanthropic disaster response much better in the Chinese context. Specifically, the relationship between agency costs and corporate philanthropy (e.g. the likelihood of donation and extent of corporate contributions) weakens in listed firms with a higher vs. lower number of women on the SB. However, women on BODs do not have a similar effect. This constructive replication provides the first examination of the moderating role of women on BODs and SBs on corporate philanthropic behavior. In addition, the findings have important managerial implications for how to enact CSR.     

How Corporate Social Responsibility Engagement Strategy Moderates the CSR–Financial Performance Relationship

We propose that firm profits are shaped by how firms engage in corporate social responsibility. Recent research on the corporate social responsibility (CSR)–corporate financial performance (CFP) relationship proposes a variety of contextual and organizational factors to create a more robust link. However, few of these studies explore the role of the CSR engagement strategy. Drawing on absorptive capacity theory and related perspectives such as time compression diseconomies, asset mass efficiencies, and path dependence theory, we argue that when a firm engages in CSR slowly and consistently, focuses on related CSR dimensions, and starts with internal dimensions of CSR, CFP will be enhanced. With longitudinal data collected from 130 firms from 1995 to 2007, we find that firms benefit more when they adopt a CSR engagement strategy that is consistent, involves related dimensions of CSR, and begins with aspects of CSR that are more internal to the firm. The pace of the CSR engagement strategy, however, does not moderate the CSR–CFP relationship. This study helps fill the gap in CSR research by showing that, regardless of contextual factors, a firm can choose the proper strategy to enhance the financial benefits of the CSR engagement.     

Why adopt now? Multiple case studies and survey studies comparing small,medium and large firms

While a number of factors have been highlighted in the innovation adoption literature, little is known about whether different factors are related to innovation adoption in differently sized firms. We used preliminary case studies of small, medium and large firms to ground our hypotheses, which were then tested using a survey of 94 firms. We found that external stakeholder pressure and non-financial readiness were related to innovation adoption in SMEs; but that for large firms, adoption was related to the opportunity to innovate. It may be that the difficulties of adopting innovations, including both the financial cost and the effort involved, are too great for SMEs to overcome unless there is either a compelling need (external pressure) or enough in-house capability (non-financial readiness). This suggests that SMEs are more likely to have innovation “pushed” onto them while large firms are more likely to “pull” innovations when they have the opportunity.     

Bargaining over Managerial Contracts in Delegation Games: The Generalized Oligopolistic Case

The main purpose of this paper is to disclose the properties of the equilibrium outcomes in the differentiated‐products model with two stages: (i) owner‐shareholders negotiate managerial compensation with their managers that comprises their profits and sales (sales delegation) and (ii) they engage in their market competition. The other purpose of this paper is to study the differentiated goods model in which an owner bargains the managerial compensation with her/his manager that comprises her/his profit and her/his rival's profit (relative performance delegation). We further investigate the situation wherein the firm with sales delegation and the firm with the relative performance delegation coexist. Copyright © 2012 John Wiley & Sons, Ltd.     

Corporate Social Responsibility and Social Entrepreneurship

Milton Friedman argued that the social responsibility of firms is to maximize profits. This paper examines this argument for the economic environment envisioned by Friedman in which citizens can personally give to social causes and can invest in profit‐maximizing firms and firms that give a portion of their profits to social causes. Citizens obtain social satisfaction from corporate social giving, but corporate giving may not be a perfect substitute for personal giving. The paper presents a theory of corporate social responsibility (CSR) and shows that CSR is costly when it is an imperfect substitute. When investors anticipate the CSR, shareholders do not bear its cost. Instead, the entrepreneurs who form the CSR firms bear the cost. Shareholders bear the cost of CSR only when it is a surprise, and it is to such surprises that Friedman objects. A social entrepreneur is willing to form a CSR firm at a financial loss because either doing so expands the opportunity sets of citizens in consumption‐social giving space or there is an entrepreneurial warm glow from forming the firm. Firms can also undertake strategic CSR activities that increase profits, and a social entrepreneur carries strategic CSR beyond profit maximization and market value maximization. The paper also examines the implications of taxes and the effect of the market for control for the sustainability of CSR.     

The configuration between supply chain integration and information technology competency: A resource orchestration perspective

Research indicates that deploying appropriate information technology (IT) competency in a manner that fits the supply chain integration (SCI) of a firm induces superior firm performance; however, our understanding of how to empirically conceptualize and assess the performance effect of the fit remains limited. Drawing upon resource orchestration theory and the literature on fit assessment methodologies, our study employs both a contingency and a configuration perspective to conceptualize and operationalize “fit.” The results of a survey of 196 firms in China provide the first empirical evidence for the existence and nature of interrelationships between multiple components of SCI and IT competency and their effects on firm performance. In particular, fit as “moderation” approach indicates that IT competency could strengthen the relationship between SCI and both operational and financial performance. Fit as “profile deviation” approach further reveals that the more similar the IT competency configurations are to those of the top performers in the high-level SCI group, the higher their operational and financial performance are. However, in the medium- and low-level SCI groups, the SCI-IT competency fit is significantly positively associated with financial performance and insignificantly associated with operational performance. The theoretical contributions and managerial implications of the study are discussed.     

Reputation and Corporate Social Responsibility Aberrations,Trends, and Hypocrisy: Reactions to Firm Choices in the Stock Option Backdating Scandal

Drawing on strategic corporate social responsibility (CSR) and reputation theory, this paper examines the market reaction to firm disclosures of involvement in the US stock option backdating scandal. We examine how a firm's prior signals regarding ethical behaviour and values, as demonstrated through CSR initiatives, may both ameliorate and exacerbate market reactions. CSR initiatives may buffer a firm against general wrong‐doing but expose it to greater scrutiny and sanction for related wrong‐doing. Our results show that firms with enhanced overall reputations for CSR are partially buffered from scandal revelations. However, we find that when firms possess an enhanced reputation for CSR associated with corporate governance, violations pertaining specifically to governance are viewed as hypocritical and more harshly sanctioned. We also find lower and negative market reactions for firms that delay but self‐disclose their involvement in the scandal. The study extends the emergent, related literatures on strategic CSR and reputation management, and documents dynamics in the relationship between corporate social and financial performance.     

社会责任报告审计能否提升CSR信息披露质量？——来自我国上市公司的经验证据

外部审计作为重要的公司治理机制,有助于提升企业经济绩效。社会责任报告审计能对企业社会责任信息的披露进行监督约束、风险评估与咨询规划,进而提升信息披露质量。以2010—2013年沪深上市公司为样本进行实证检验后发现,社会责任报告审计显著改善了企业社会责任信息披露质量。进一步研究发现,企业大股东监督力度越强,社会责任报告审计对企业社会责任信息披露质量的促进作用越明显。此外,与国有企业相比,民营企业中大股东监督在更大的程度上增强了社会责任报告审计对企业社会责任信息披露质量的促进作用。