Delegated Job Design

28 Pages Posted: 7 May 2003

See all articles by Hans K. Hvide

Hans K. Hvide

University of Bergen - Department of Economics; University of Aberdeen - Business School; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Todd R. Kaplan

University of Exeter Business School - Department of Economics; University of Haifa - Department of Economics

Date Written: December 5, 2005

Abstract

We develop a theory of delegation within organizations where agents are privately informed about whether they should be engaged in exploitation or in exploration activities. Excessive delegation lead agents to inefficiently herd into exploration in an attempt to boost their market value. The theory is consistent with both high-delegation practices and practices where agents are assigned to activities. Our main result is that an agent should be delegated more the weaker career concerns, a variable that is made endogenous through the firm's technology and its degree of transparency. The theory sheds light on empirical regularities that are previously unexplained, such as a positive relation between wages and delegation, and delegation being more prevalent in closed environments or environments with long-term employment contracts.

Keywords: Career concerns, Delegation, Discretion, Sun Hydraulics, Wage inequality

JEL Classification: C72, D23, D44, D82, J33, M12, M40, M46

Suggested Citation

Hvide, Hans and Kaplan, Todd R., Delegated Job Design (December 5, 2005). Available at SSRN: https://ssrn.com/abstract=388320 or http://dx.doi.org/10.2139/ssrn.388320

Hans Hvide (Contact Author)

University of Bergen - Department of Economics ( email )

Fosswinckelsgt. 6
N-5007 Bergen, 5007
Norway

University of Aberdeen - Business School ( email )

Edward Wright Building
Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom

HOME PAGE: http://hans.hvide.googlepages.com/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Todd R. Kaplan

University of Exeter Business School - Department of Economics ( email )

Streatham Court
Exeter, EX4 4RJ
United Kingdom
+44 13 9226 3237 (Phone)

University of Haifa - Department of Economics

Haifa 31905
Israel

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