TY - JOUR
T1 - Power dynamics in organizations
AU - Li, Jin
AU - Matouschek, Niko
AU - Powell, Michael
N1 - Copyright:
Copyright 2017 Elsevier B.V., All rights reserved.
PY - 2017
Y1 - 2017
N2 - We examine an infinitely repeated game between a principal, who has the formal authority to decide on a project, and a biased agent, who is privately informed about what projects are available. The optimal relational contract speaks to how power is earned, lost, and retained. It shows that entrenched power structures are consistent with optimal administration of power. And it provides new perspectives on why similar firms organize differently, even when those organizational differences lead to persistent differences in performance, and why established firms fail to exploit new opportunities, even when they are publicly observable.
AB - We examine an infinitely repeated game between a principal, who has the formal authority to decide on a project, and a biased agent, who is privately informed about what projects are available. The optimal relational contract speaks to how power is earned, lost, and retained. It shows that entrenched power structures are consistent with optimal administration of power. And it provides new perspectives on why similar firms organize differently, even when those organizational differences lead to persistent differences in performance, and why established firms fail to exploit new opportunities, even when they are publicly observable.
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U2 - 10.1257/mic.20150138
DO - 10.1257/mic.20150138
M3 - Article
AN - SCOPUS:85017107174
VL - 9
SP - 217
EP - 241
JO - American Economic Journal: Microeconomics
JF - American Economic Journal: Microeconomics
SN - 1945-7669
IS - 1
ER -