Can Entrenched Lame Ducks Be Optimal? An Economic Model of Leadership and Organizational Change
30 Pages Posted: 23 Apr 2007
Date Written: February 2007
Assume leaders cannot coerce followers: effective leaders can make changes because other people want to follow them, while ineffective leaders are unable to make changes because others will tacitly resist. Assume followers and leaders share the same objectives for successful change, but leaders have a limited tenure while followers are long lived. This time pressure for the leader can lead to outcomes in which lame ducks are unable to attract support towards the end of their tenure. We show that entrenchment, as opposed to early removal of lame ducks, can be optimal because it improves incentives ex ante. We also consider heterogeneity in the underlying talent of leaders. If good leaders are those with a higher chance of forming a plan, there is a trade-off involving the benefits of sacking inactive leaders, but in our specification it remains true that entrenchment is optimal.
Keywords: Leadership, Entrenchment, Governance, Change
JEL Classification: D70, G30, M50
Suggested Citation: Suggested Citation