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American Economic Journal: Microeconomics: Vol. 4 No. 3 (August 2012)

AEJ: Micro Volume. 4, Issue 3 | Previous ArticleNext Article

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Employee Initiative and Managerial Control

Article Citation

Rantakari, Heikki. 2012. "Employee Initiative and Managerial Control." American Economic Journal: Microeconomics, 4(3): 171-211.

DOI: 10.1257/mic.4.3.171

Abstract

I analyze the impact of managerial involvement and the allocation of authority on employee initiative in a setting where both a manager and an employee can originate new ideas for implementation. I show that employee initiative is maximized through the combination of formal authority and limited but positive levels of involvement by the manager, a result which thus qualifies the motivational advantages of both formal delegation and a hands-off management strategy. This result arises through an indirect monitoring role played by managerial involvement that has been absent in previous frameworks, and the implications of which for the optimal organizational arrangement are further analyzed. (JEL D23, M12, M54)

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Authors

Rantakari, Heikki (U Southern CA)

JEL Classifications

D23: Organizational Behavior; Transaction Costs; Property Rights
M12: Personnel Management; Executive Compensation
M54: Personnel Economics: Labor Management

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