Visionaries, Managers, and Strategic Direction

Posted: 20 Oct 2000

See all articles by Garth Saloner

Garth Saloner

Stanford Graduate School of Business

Julio J. Rotemberg

Harvard University, Business, Government and the International Economy Unit (deceased); National Bureau of Economic Research (NBER) (deceased)

Abstract

Incentives for profitable innovation may be enhanced by employing a "visionary" CEO whose "vision" biases him in favor of certain projects. CEO vision changes which projects get implemented and thus affects the incentives of employees who can be compensated for their innovative ideas only when they become embodied in implemented projects. Profits may be enhanced further by letting objective managers decide which projects to investigate even though their decisions can depart from the firm's "strategy" by differing from those the CEO would have made.

Suggested Citation

Saloner, Garth and Rotemberg, Julio J., Visionaries, Managers, and Strategic Direction. RAND Journal of Economics, Vol. 31, No. 4, 2000. Available at SSRN: https://ssrn.com/abstract=244845

Garth Saloner (Contact Author)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
(650) 723-1940 (Phone)

Julio J. Rotemberg

Harvard University, Business, Government and the International Economy Unit (deceased) ( email )

Cambridge, MA
United States
617-495-1015 (Phone)
617-496-5994 (Fax)

National Bureau of Economic Research (NBER) (deceased)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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