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Formal and Real Authority in Organizations
Abstract
This paper develops a theory of the allocation of formal authority (the right to decide) and real authority (the effective control over decisions) within organizations, and it illustrates how a formally integrated structure can accommodate various degrees of "real" integration. Real authority is determined by the structure of information, which in turn depends on the allocation of formal authority. An increase in an agent's real authority promotes initiative but results in a loss of control for the principal. After spelling out (some of) the main determinants of the delegation of formal authority within organizations, the paper examines a number of factors that increase the subordinates' real authority in a formally integrated structure: overload, lenient rules, urgency of decision, reputation, performance measurement, and multiplicity of superiors. Finally, the amount of communication in an organization is shown to depend on the allocation of formal authority.
... Firms sometimes incentivize their employees (or suppliers) through an appropriate organization design rather than through incentive contracts. Aghion and Tirole (1997) made this point clear by showing that if a "boss" delegates to a "subordinate" the authority to implement a decision, she can incentivize the subordinate to exert creative efforts that may ultimately benefit the boss. 4 While Aghion and Tirole (1997) make the simplifying assumption that a boss can contractually commit to delegate authority, in most organizations, delegation (and, more broadly, any configuration of the organizational chart) is the boss's discretionary decision and, thus, can always be retracted. ...
... Rantakari (2023) develops a "radical" model of relational organization design in which even the boss's authority over her/his subordinates (which is assumed to be contractual in both Aghion &Tirole, 1997, andBaker et al., 1999) must be part of a self-enforcing relational agreement. In this agreement, centralized authority arises in equilibrium when the employee makes a self-enforcing promise to follow the boss's instructions (without attempting to investigate the matter and second-guess the boss). ...
... Rantakari (2023) develops a "radical" model of relational organization design in which even the boss's authority over her/his subordinates (which is assumed to be contractual in both Aghion &Tirole, 1997, andBaker et al., 1999) must be part of a self-enforcing relational agreement. In this agreement, centralized authority arises in equilibrium when the employee makes a self-enforcing promise to follow the boss's instructions (without attempting to investigate the matter and second-guess the boss). ...
In this chapter, we provide a framework to investigate the interaction between the “hardware” (formal contracting) and the “software” (relational contracting) of economic collaborations, both within and between firms. First, we present a simple formulation of the “canonical model” of relational contracting and highlight its key empirical implications. Next, we discuss selected empirical works that shed light on the relevance and testability of the model’s predictions. While significant progress has been made at measuring the complementarity between formal and relational contracts, our investigation highlights several implications of the model that are consistent with anecdotes yet lack systematic empirical verification. Testing these implications is an exciting opportunity for future scholars in the field.
... Udviklingen kan ses som et forsøg på at styrke ledelsesarbejdet gennem øget ledelsesautoritet. Vi mangler imidlertid både teoretisk og empirisk viden om fordelingen og betydningen af formel ledelsesautoritet, som handler om retten til at traeffe ledelsesbeslutninger for en afgraenset del af en organisation og dens ansatte (fx Aghion og Tirole, 1997;Boye, 2021;Simon, 1997). ...
... I forskningslitteraturen om offentlig ledelse findes en del studier, som på forskellig vis beskaeftiger sig med ledelsesautoritet (fx Moynihan og Pandey, 2006;Nielsen, 2014) og det naerliggende begreb ledelsesautonomi (fx Van der Voet og Van de Walle, 2018;Verhoest, Verschuere og Bouckaert, 2007). Når vi taler om formel ledelsesautoritet, taler vi om retten til at traeffe ledelsesbeslutninger for en afgraenset del af en organisation og dens ansatte (fx Aghion og Tirole, 1997;Boye, 2021;Simon, 1997). Denne ret udspringer af en eksplicit eller implicit kontrakt, som er indgået mellem et individ på et højere organisatorisk niveau og et individ på et lavere organisatorisk niveau, som specificerer, hvor meget autoritet der delegeres til individet på det lavere organisatoriske niveau (Aghion og Tirole, 1997). ...
... Når vi taler om formel ledelsesautoritet, taler vi om retten til at traeffe ledelsesbeslutninger for en afgraenset del af en organisation og dens ansatte (fx Aghion og Tirole, 1997;Boye, 2021;Simon, 1997). Denne ret udspringer af en eksplicit eller implicit kontrakt, som er indgået mellem et individ på et højere organisatorisk niveau og et individ på et lavere organisatorisk niveau, som specificerer, hvor meget autoritet der delegeres til individet på det lavere organisatoriske niveau (Aghion og Tirole, 1997). Forståelsen af formel ledelsesautoritet hviler altså på en hierarkisk forståelse af, hvordan autoritet fordeles vertikalt i organisationer. ...
Formel ledelsesautoritet er retten til at træffe ledelsesbeslutninger for en afgrænset del af en organisation og dens ansatte. Med udgangspunkt i litteraturen udvikler denne artikel et mål for formel ledelsesautoritet, som anvendes til at undersøge fordeling af formel ledelsesautoritet. Resultaterne fra en spørgeskemaundersøgelse blandt 181 ledende overlæger og 451 oversygeplejersker viser, at den formelle ledelsesautoritet varierer markant på tværs af typer af ledelsesbeslutninger og faggrupper. En eksplorativ sammenhængsanalyse viser, at formel ledelsesautoritet hænger positivt sammen med selvrapporteret visionsledelse og oplevelsen af at kunne løse ledelsesopgaver inden for den afsatte tid. Vi finder ingen sammenhæng med selvrapporteret brug af verbal anerkendelse eller oplevelsen af at have de nødvendige ledelsesmæssige kompetencer.
... The contributions of this paper are mainly threefold. First, based on the theory of power allocation proposed by Aghion and Tirole (1997), we analyze the impact of recentralization on environmental data manipulation in the public sector from the perspective of formal and real authorities. This research not only responds to the debate on the governance effects of centralization and decentralization but also demonstrates the positive effects of recentralization on environmental governance. ...
... In bureaucracies, power allocation not only affects the overall performance of organizations but also influences the effectiveness of policy implementation (Zhu and Zhang 2019). We adopt the distinction between formal and real authorities over decisions proposed by Aghion and Tirole (1997) in power allocation theory. Formal authority refers to the right to decide, while real authority refers to effective control over decisions. ...
... Organizational hierarchy shapes the structure of information transmission and communication among participants (Dessein 2002;Radner 1992), and the informational distance between formal and real authority is an important organizational design variable (Aghion and Tirole 1997;Rantakari 2012). Under China's environmental management system, the central government usually has the formal authority to initiate environmental governance, while local governments, as supervisors of environmental policies, have the power to assess the overall effectiveness of environmental governance, thus becoming the party with real authority over environmental decisions (Aghion and Tirole 1997;Dong et al. 2024). ...
Based on monthly panel data from 2014 to 2020 and employing the staggered difference-in-differences (staggered DID) method, we examine the impact of environmental vertical management reform on data manipulation in the public sector. We reveal that environmental vertical management reform significantly reduces data manipulation in the public sector. Moderating effect analysis shows that economic growth targets weaken the inhibitory impact of this reform. Conversely, public environmental concerns could enhance the inhibitory impact of this reform on data manipulation. Mechanism analysis reveals that environmental vertical management reform works through strengthening grassroots environmental law enforcement. The increased independence of law-enforcing departments has reduced the tendency of local governments to engage in data manipulation.
... Allocation of decision rights has implications for joint profit-maximization because control rights affect incentives to take non-contracted actions that affect joint value. (Fama & Jensen, 1983;Aghion & Tirole, 1997;Baker et al., 1999). Aghion & Tirole (1997) present a model of incomplete contracting that could deepen AI analysis of the impact of human control on AI learning and behavior by modeling both robot and human as strategic actors. ...
... (Fama & Jensen, 1983;Aghion & Tirole, 1997;Baker et al., 1999). Aghion & Tirole (1997) present a model of incomplete contracting that could deepen AI analysis of the impact of human control on AI learning and behavior by modeling both robot and human as strategic actors. Their model distinguishes between formal authority-the right to implement one's preferred choice-and real authority-the capacity to implement one's preferred choice in practice. ...
... (See, e.g., Orseau & Armstrong (2016)). The Aghion & Tirole (1997) model suggests that an agent's beliefs about what the human knows also matter. This consideration presumably has implications for a strongly strategic AI's incentives to share information. ...
We suggest that the analysis of incomplete contracting developed by law and economics researchers can provide a useful framework for understanding the AI alignment problem and help to generate a systematic approach to finding solutions. We first provide an overview of the incomplete contracting literature and explore parallels between this work and the problem of AI alignment. As we emphasize, misalignment between principal and agent is a core focus of economic analysis. We highlight some technical results from the economics literature on incomplete contracts that may provide insights for AI alignment researchers. Our core contribution, however, is to bring to bear an insight that economists have been urged to absorb from legal scholars and other behavioral scientists: the fact that human contracting is supported by substantial amounts of external structure, such as generally available institutions (culture, law) that can supply implied terms to fill the gaps in incomplete contracts. We propose a research agenda for AI alignment work that focuses on the problem of how to build AI that can replicate the human cognitive processes that connect individual incomplete contracts with this supporting external structure.
... Conversely, decentralization offers a potential remedy to these inefficiencies by delegating decision-making authority to local governments [12]. This shift allows local governments to better utilize their informational advantages, potentially leading to more efficient resource allocation [13][14][15][16]. Jin et al. (2023) suggest that reforms aimed at decentralizing administrative powers in China have successfully stimulated economic activity by empowering local governments [17]. ...
... Jin et al. (2023) suggest that reforms aimed at decentralizing administrative powers in China have successfully stimulated economic activity by empowering local governments [17]. Additionally, organizational theory, as discussed by Aghion and Tirole (1997), supports the idea that aligning power with information within an organization can enhance efficiency [13]. ...
... Jin et al. (2023) suggest that reforms aimed at decentralizing administrative powers in China have successfully stimulated economic activity by empowering local governments [17]. Additionally, organizational theory, as discussed by Aghion and Tirole (1997), supports the idea that aligning power with information within an organization can enhance efficiency [13]. ...
This study examines the impact of China's industrial land approval reform (ILAR) on the provision of subnational services. Utilizing the 2011 pilot reform policy approved by the State Council , we utilize a staggered Difference-inDifferences (DID) method to determine the reform's impact on local economic growth and environmental protection. The findings reveal that the reform enhances local economic development and decreases pollution levels. Additionally, the reform significantly decreases land resource misallocation in pilot cities, enhancing productivity. We also find that local governments allocate more land to the tertiary sector through this reform, achieving industrial upgrading. The optimization effects are more pronounced in cities with higher fiscal pressure. Based on these findings, we recommend that policymakers sustain decentralization efforts and consider further incentives for cities under fiscal stress. We fill a gap in the literature by linking land use regulation with subnational service provision, contributing to the understanding of the socioeconomic benefits of decentralization and local government service levels.
... Inspired by such empirical observations, economic theorists have developed a range of mathematical equilibrium models (Box 3), which describe proxy failure within what is known as the principal-agent framework (Aghion & Tirole, 1997;Baker, Box 3. Proxy failure and equilibrium models Formal economic as well as ecological models often rely on equilibrium analysis, implicitly assuming an unchanging world. This is partially owed to prevalent methodological traditions that are focused on analytic models. ...
... For instance, we can think of KPIs as the communication interface between general management and individual departments. Aghion and Tirole (1997) develop a theory of delegation of authority in hierarchical corporate contexts, exploring the complex roles of information and "incentive congruence" in determining how proxies can be gainfully used. More generally, proxies appear to reflect the division of labour in complex organizations or multistep processes, which may occur on different timescales. ...
... Throughout this paper, we have repeatedly noted that proxybased decision systems are embedded in larger hierarchies, where high-level goals may constrain or shape low-level goals (Heylighen & Joslyn, 2001). For instance, markets contain corporations, which contain departments, which contain individuals (Aghion & Tirole, 1997). Individuals are themselves nested hierarchical systems, containing organs such as the brain which in turn are organized in subsystems, down to the level of cells and organelles (Farnsworth et al., 2017). ...
In their target article, John et al. make a convincing case that there is a unified phenomenon behind the common finding that measures become worse targets over time. Here, we will apply their framework to the domain of animal welfare science and present a pragmatic solution to reduce its impact that might also be applicable in other domains.
... However, Enterprise Risk Management (ERM) is not a strictly serial process (Walton et al., 2021) and the 5 LoA are not orthogonal, but inter-related. Our study addresses the need to investigate the combined functioning of the 5 LoA by outlining the accountabilities organizations assign to various roles, how these roles interact to progress CS (Wilkin and Chenhall, 2020;Eulerich, 2021), and who has formal and informal authority over CS decision-making (Aghion and Tirole, 1997). In studying the type of the 5 LoA adoption in CS governance configuration, we develop a two-dimensional scale defined by (i) segregation of lines and (ii) level of engagement in the roles contained in the 5 LoA. ...
... This study focuses on the structural and relational governance mechanisms of IT governance (Van Grembergen et al., 2004) and thereby addresses two distinct but related questions. Governance structure focuses on the question, 'Who has what role in how decisions are made?' whilst relational mechanisms address the question, 'Who collaborates with whom, and how do they monitor each other?' Relational mechanisms deal with formal and informal authority (Aghion and Tirole, 1997) and include cooperation, strategic dialogue, and shared learning among corporate executives, IT management, and business management (Peterson and Van Grembergen, 2004;Van Grembergen et al., 2004). ...
... Moreover, the fourth and fifth line (management and the BoD) have insufficient competencies and often struggle to understand CS reports, which leads to lax accountability that undermines effective cyber governance (Nasdaq and Tanium, 2016;McKinsey Global Survey, 2018). The question then is, to what extent formal authority reflects real authority (Aghion and Tirole, 1997). ...
... A small number of scholars (Chao et al, 2021; Chao and Han, 2022; ) conducted some empirical studies for the 2002 sub-municipal vertical environment reform pilot in Shanxi Province [1]. However, since the sub-municipal vertical environment reform pilot in Shanxi Province was implemented by local governments in a special context [2], there could be endogeneity between the reason for reform and the result of vertical reform. The nationwide vertical environment reform in 2016 was deployed by the central government, it is more mandatory and coordinated, and has better exogeneity, providing researchers with a better opportunity to empirically test the differences in governance effects between territorial and vertical management. ...
... (1) (2) and (3) of Table 2 report the effects of the vertical environment reform on the regional industrial emissions of SO 2 , e uents, and fumes respectively. The coe cients of the in columns (1) and (3) are all negative at the 1% signi cance level, while the coe cients of the in column (2) are negative at the 5% signi cance level, indicating that the implementation of vertical environment reform has signi cantly reducing the emissions of SO 2 , e uents, and fumes in the region. The hypothesis 1 of this paper is veri ed. ...
... The above process was randomly simulated 1000 times. The coe cients' Tvalues from the regression results of 1000 random simulations were generated as kernel density plots, as shown in Fig. 7, Fig. 8, and Fig. 9, representing the placebo test results for SO 2 Columns (1)(2)(3) of Table 5 report the regression results on industrial sulfur dioxide emissions per capita (perso2), industrial wastewater emissions per capita (pere uents), and industrial smoke emissions per capita (perfumes), respectively. Columns (4)(5)(6) report the regression results on industrial sulfur dioxide emissions per unit GDP (so2/gdp), industrial wastewater emissions per unit GDP (e uents/gdp), and industrial smoke emissions per unit GDP (fumes/gdp), respectively. ...
This study uses data of 263 prefecture-level cities from 2013 to 2020 to examine the effects of China's vertical environmental reform on pollutant emissions in urban areas. The findings demonstrate that vertical environmental reform improves local governments' ability to enforce environmental laws, resulting in a reduction in regional pollutant emissions with long-lasting effects. The reason is that the vertical environmental reform has achieved a division between county-level governments and county-level environmental protection bureaus and has granted formal authority and real authority to the environmental protection bureaus in provincial-level and prefecture-level governments, thereby enhancing the independence of environmental monitoring and enforcement and ensuring the strict enforcement at the grassroots level. According to heterogeneity analysis, local governments' financial pressure and official associations do not have a heterogeneous impact on the vertical environmental reform's ability to reduce pollution, and the reform treats border pollution problems more effectively.
... A prominent early example was Lincoln Electric's plan to incentivize typists in its secretarial pool through a piece-rate for each key stroked (The Lincoln Electric Company, 1975). This apparently led to typists continuously tapping the same key during lunch hours (Baker, 2002 (Aghion & Tirole, 1997;Baker, 2002;Bénabou & Tirole, 2016;Holmström, 2017). The task of the principal or 'regulator' is cast as the design of an 'optimal incentive contract', given noise or the potential for active 'distortion' (Baker, 2002;Hennessy & Goodhart, 2021 (Baker, 2002). ...
... For instance, we can think of KPIs as the communication interface between general management and individual departments. Aghion & Tirole (1997) develop a theory of delegation of authority in hierarchical corporate contexts, exploring the complex roles of information and 'incentive congruence' in Box 3. Proxy failure and equilibrium models. Formal economic as well as ecological models often rely on equilibrium analysis, implicitly assuming an unchanging world. ...
... Throughout this paper, we have repeatedly noted that proxy-based decision systems are embedded in larger hierarchies, where high-level goals may constrain or shape low-level goals (Heylighen & Joslyn, 2001). For instance, markets contain corporations, which contain departments, which contain individuals (Aghion & Tirole, 1997). Individuals are themselves nested hierarchical systems, containing organs such as the brain which in turn are organized in subsystems, down to the level of cells and organelles (Farnsworth et al., 2017). ...
When a measure becomes a target, it ceases to be a good measure. For example, when standardized test scores in education become targets, teachers may start 'teaching to the test', leading to breakdown of the relationship between the measure--test performance--and the underlying goal--quality education. Similar phenomena have been named and described across a broad range of contexts, such as economics, academia, machine-learning, and ecology. Yet it remains unclear whether these phenomena bear only superficial similarities, or if they derive from some fundamental unifying mechanism. Here, we propose such a unifying mechanism, which we label proxy failure. We first review illustrative examples and their labels, such as the 'Cobra effect', 'Goodhart's law', and 'Campbell's law'. Second, we identify central prerequisites and constraints of proxy failure, noting that it is often only a partial failure or divergence. We argue that whenever incentivization or selection is based on an imperfect proxy measure of the underlying goal, a pressure arises which tends to make the proxy a worse approximation of the goal. Third, we develop this perspective for three concrete contexts, namely neuroscience, economics and ecology, highlighting similarities and differences. Fourth, we outline consequences of proxy failure, suggesting it is key to understanding the structure and evolution of goal-oriented systems. Our account draws on a broad range of disciplines, but we can only scratch the surface within each. We thus hope the present account elicits a collaborative enterprise, entailing both critical discussion as well as extensions in contexts we have missed.
... Dutta and Fan (2012) argue that a firm could opt to delegate investment decision rights to its divisions, thereby committing to avoid centralized monitoring of divisional investment opportunities. Aghion and Tirole (1997) reach a similar conclusion within an incomplete contracting framework. A common theme in the works of Aghion and Tirole (1997)), Arya et al. (2000), and Dutta and Fan (2012) is that excessive information can disadvantage a principal with limited commitment capabilities. ...
... Aghion and Tirole (1997) reach a similar conclusion within an incomplete contracting framework. A common theme in the works of Aghion and Tirole (1997)), Arya et al. (2000), and Dutta and Fan (2012) is that excessive information can disadvantage a principal with limited commitment capabilities. However, unlike our study, these papers do not explore the impact of competition on incentives, as they all investigate single agent settings. ...
This paper investigates how competition for scarce corporate resources impacts innovation incentives within multidivisional firms and, consequently, shapes firms’ preferences for fostering or restricting intra-firm competition. In our model, divisions become privately informed about the potential value of new investment opportunities generated through their innovation initiatives. We demonstrate that intra-firm competition unambiguously reduces divisions’ ex ante innovation incentives. However, it benefits ex post resource allocation by enabling the firm to (i) select the most promising project and (ii) limit the rents divisions earn from their private information. Consequently, a firm’s preference to limit or encourage interdivisional competition hinges on balancing ex post allocative efficiency, which favors increased intra-firm competition, against ex ante innovation incentives, which favor reduced competition. Our analysis identifies plausible conditions under which each organizational design—competitive or exclusive innovation—emerges as the optimal choice.
... However, effectively allocating decision authority is a difficult task. Organization theorists suggest that the "optimum" level of delegation of decision authority depends on the balance between the informational benefits associated with delegation and the costs arising from the loss of control over decisions (Aghion & Tirole, 1997;Dessein, 2002;Harris & Raviv, 2005;Jensen & Meckling, 1992). Entrepreneurs may not have the required managerial abilities to consider carefully these benefits and costs. ...
... The "optimum" level of delegation of decision authority depends on the trade-off between the benefits and costs associated with delegation. In accordance with the insights of delegation theory (Aghion & Tirole, 1997;Dessein, 2002;Harris & Raviv, 2005;Jensen & Meckling, 1992), delegating the authority over a focal decision in the hands of the individual who possesses the relevant knowledge needed to make the decision allows startups to use the knowledge that is distributed across the members of the organization in an efficient way. Moreover, the delegation of non-key decisions frees the time of startups' top managers who can consequently devote their attention and energy to the most important and strategic decisions (Garicano, 2000;Harris & Raviv, 2002). ...
We study the delegation of authority over strategic decisions in startups and how it relates to venture capital (VC) investment through a mixed-methods study. We first show that startups typically centralize decision authority. The extent of delegation is higher if startups are VC-backed. In startups backed by corporate VC investors the aim is to leverage the unique knowledge possessed by entrepreneurial team members in a context characterized by low principal-principal agency costs. In those backed by independent VC investors, the increase in delegation is paired with the emergence of a polyarchy and decoupling between the formal and real organizations. In this situation delegation may serve as a control mechanism aligning the actions of startups with the interests of the VC investors.
... There is considerable game-theoretic work that analyzes formal hierarchical structures that establish how authority and communication flow within organizations. For example, see Aghion and Tirole (1997), Demange (2004), Garicano (2000) and Hart and Moore (2005). In this literature hierarchies are formal structures designed to achieve a more fundamental goal. ...
... In contrast, we define our notions of stability and weak stability directly on abstract hierarchical games. 2 Another exception is the literature that studies contests for status. For example, see Drugov and Ryvkin (2020), Dubey and Geanakoplos (2010), and Moldovanu, Sela and Shi (2007). ...
We introduce a model of social hierarchy formation and provide a notion of stability and weak stability for hierarchies. We characterize both notions and prove the existence of weakly stable hierarchies. Then, we explore three applications. First, we examine how stable hierarchies evolve when a class grows wealthier in a society divided into classes based on nobility and wealth. Second, we analyze how factions with different status form in a political party when members are primarily concerned with policy preferences. Third, we consider a society in which individuals are characterized by observable attributes and these attributes define the common preferences.
... The main contribution of our paper is to bring labour institutions and industrial relations arrangements into the analysis of firm organization, particularly in relation to the allocation of authority and the structure of production hierarchies (Aghion and Tirole, 1997;Caliendo et al., 2015;Caliendo and Rossi-Hansberg, 2012;Colombo and Delmastro, 2004;Cordes et al., 2011;Delmastro, 2002;Garicano, 2000;Garicano and Wu, 2012;Hart and Moore, 2005;Reinstaller, 2007). There is an extensive literature analysing a wide range of determinants of firm hierarchies, such as technology, competition, social capital, trade openness and inter-firm transactions (Acemoglu et al., 2007;Bloom et al., 2012Bloom et al., , 2014Bresnahan et al., 2002;Caroli and Van Reenen, 2001;Delmastro, 2002;Guadalupe and Wulf, 2010;Luo et al., 2012). ...
... However, our results may be consistent with alternative models. For instance, models of hierarchy and delegation put significant emphasis on issues related to incentive design in environments characterized by contractual incompleteness (Aghion and Tirole, 1997;Dessein, 2002;Mookherjee, 2013). Dessein (2002) develops a model in which delegation by the principal to an agent is greater when the agent's reporting bias, which is a proxy of the conflicting interest between him and the principal, is sufficiently small. ...
We investigate whether workplace voice through institutionalized forms of employee representation (ER) affects the design of firm hierarchies. We look at the role of ER within a knowledge-based view of hierarchies, where the firm's choice of hierarchical layers depends on the trade-off between communication and knowledge acquisition costs. Using a sample of more than 20,000 private-sector firms in 32 countries, we find that the presence of ER is positively associated with the number of organizational layers, though the relationship is tempered by firm size. ER positively correlates with job training, skill development and enhanced internal communication via staff meetings. The analysis of managers' perceptions suggests the higher frequency of meetings in firms with ER does not lead to more delays in the implementation of organizational changes. Taken together, our findings point to ER as facilitating the flow of information to top decision-makers and hence reducing communication costs. This may enable the firm to economize scarce cognitive resources without retarding the accumulation of new shop-floor capabilities. We contribute to recent literature on organizational design by suggesting ER institutions as possibly relaxing the trade-off between communication and knowledge acquisition costs within firms.
... Third, we hypothesize that delegation of voting rights is influenced by demonstrated skill and commitment, leading to a reputation-and merit-based delegation model. Optimal delegation favours agents with strong reputations for relevant expertise (Aghion and Tirole, 1997). In DAOs, participants with a track record of technical expertise, community leadership, and ecosystem contributions are more likely to receive delegated votes. ...
We investigate the drivers of vote delegation in Decentralized Autonomous Organizations (DAOs), using the Uniswap governance DAO as a laboratory. We show that parties with fewer self-owned votes and those affiliated with the controlling venture capital firm, Andreesen Horowitz (a16z), receive more vote delegations. These patterns suggest that while the Uniswap ecosystem values decentralization, a16z may engage in window-dressing around it. Moreover, we find that an active and successful track record in submitting improvement proposals, especially in the final stage, leads to more vote delegations, indicating that delegation in DAOs is at least partly reputation- or merit-based. Combined, our findings provide new insights into how governance and decentralization operate in DeFi.
... In traditional settings, namely incomplete contracts (Grossman & Hart, 1986;Hart & Moore, 1990), underspecification is addressed through residual control rights, which determine who has decision-making authority in situations not explicitly covered by the contract (Hart & Moore, 1990;Hart, 1995). Determination of these rights is typically dictated by the parties' relative bargaining power, risk allocation, available information, and expertise (Aghion & Bolton, 1992;Aghion & Tirole, 1997;Baker et al., 2002). ...
The endowment of AI with reasoning capabilities and some degree of agency is widely viewed as a path toward more capable and generalizable systems. Our position is that the current development of agentic AI requires a more holistic, systems-theoretic perspective in order to fully understand their capabilities and mitigate any emergent risks. The primary motivation for our position is that AI development is currently overly focused on individual model capabilities, often ignoring broader emergent behavior, leading to a significant underestimation in the true capabilities and associated risks of agentic AI. We describe some fundamental mechanisms by which advanced capabilities can emerge from (comparably simpler) agents simply due to their interaction with the environment and other agents. Informed by an extensive amount of existing literature from various fields, we outline mechanisms for enhanced agent cognition, emergent causal reasoning ability, and metacognitive awareness. We conclude by presenting some key open challenges and guidance for the development of agentic AI. We emphasize that a systems-level perspective is essential for better understanding, and purposefully shaping, agentic AI systems.
... AI agents in our treatment are not quite automata in a machine game, as in Rubinstein [1986] but could modeled as such. Our treatment of TEE-resident AI agents is closer to the principle agent setting of Aghion and Tirole [1997], where agents have some congruence parameter measuring how closely its objectives match the principal's. ...
We study a fundamental challenge in the economics of innovation: an inventor must reveal details of a new idea to secure compensation or funding, yet such disclosure risks expropriation. We present a model in which a seller (inventor) and buyer (investor) bargain over an information good under the threat of hold-up. In the classical setting, the seller withholds disclosure to avoid misappropriation, leading to inefficiency. We show that trusted execution environments (TEEs) combined with AI agents can mitigate and even fully eliminate this hold-up problem. By delegating the disclosure and payment decisions to tamper-proof programs, the seller can safely reveal the invention without risking expropriation, achieving full disclosure and an efficient ex post transfer. Moreover, even if the invention's value exceeds a threshold that TEEs can fully secure, partial disclosure still improves outcomes compared to no disclosure. Recognizing that real AI agents are imperfect, we model "agent errors" in payments or disclosures and demonstrate that budget caps and acceptance thresholds suffice to preserve most of the efficiency gains. Our results imply that cryptographic or hardware-based solutions can function as an "ironclad NDA," substantially mitigating the fundamental disclosure-appropriation paradox first identified by Arrow (1962) and Nelson (1959). This has far-reaching policy implications for fostering R&D, technology transfer, and collaboration.
... As a third contribution, we identify when declaring a single agent responsible works, i.e., when formal translates into real responsibility, so that the principal can commit to blame. Principals who formally delegate a decision 8 must commit themselves not to interfere with the agent's choice in order to really transfer authority, which can be achieved by being busy (Prendergast, 1995) or staying ignorant (Aghion and Tirole, 1997). Here, in the case of committing to blame, the crucial condition is that members who are not formally responsible cannot be blamed (Theorem 1). ...
Teams are formed because input from different people is needed. Providing incentives to team members, however, can be difficult. According to received wisdom, declaring all members responsible fails because real responsibility for team output “diffuses.” But why? Also, why and when does formally declaring one member “responsible” mean that this member can be attributed real responsibility? We offer a model that answers these questions. We identify when jointly declaring a team responsible results in reputation free riding. We show that declaring one person responsible can overcome this problem but only if all other team members are protected from being sanctioned.
This paper was accepted by Dorothea Kübler, behavioral economics and decision analysis.
... As a third contribution, we identify when declaring a single agent responsible works, i.e., when formal translates into real responsibility, so that the principal can commit to blame. Principals who formally delegate a decision 8 must commit themselves not to interfere with the agent's choice in order to really transfer authority, which can be achieved by being busy (Prendergast, 1995) or staying ignorant (Aghion and Tirole, 1997). Here, in the case of committing to blame, the crucial condition is that members who are not formally responsible cannot be blamed (Theorem 1). ...
... More broadly, our paper relates to a literature analyzing dissent in organizations, such as Aghion and Tirole (1997), Dewatripont andTirole (1999), or Landier, Sraer, andThesmar (2009) (2019) also warn against excessive conservatism in a model where trading opportunities are short-lived due to competition, but they do not endogenize compensation. While we take the bank's organization as given, Strausz (1997) shows that delegation of monitoring arises endogenously when output is not verifiable. ...
Some bank regulators warn that risk managers (RMs) will collude with banks' front offices (FOs) and rubberstamp investments if their bonuses depend on the performance of FOs. We show theoretically that positive pay correlation between FOs and RMs can instead be optimal. Based on data for German non-executive bank employees, we show empirically that performance pay is indeed positively correlated between RMs and FOs in practice. These pay correlations tend to be higher in banks with competent directors and in banks with stronger performance during the crisis of 2008, in line with our model predictions.
... For instance, Baron and Besanko (1992) and Melumad et al. (1995) explore conditions under which delegated contracting replicates efficient centralized outcomes under complete contracts. Further insights into decentralization trade-offs between control loss and improved information are provided by Aghion and Tirole (1997), Baker et al. (1999), Rajan and Zingales (2001), Dessein (2002), and Hart and Moore (2005). ...
This study investigates the R&D organizational structure of a multi-product monopolistic firm where the central office decides between centralized and decentralized R&D under research spillovers. We demonstrate that decentralized R&D becomes advantageous when the difference between monitoring and coordination costs is relatively high while products are sufficiently differentiated with lower spillovers. We also find that decentralized R&D can yield higher social welfare under moderate spillovers and product differentiation conditions. Our findings underscore the governmental need for a nuanced approach in designing R&D structures, considering the trade-offs between centralized and decentralized R&D to align producer and consumer incentives.
... The observed risk produced by banks includes information on the verifiable characteristics of firms, such as financial information from public credit bureaus (Nakamura and Roszbach 2018). Banks draw on financial information on firms to produce credit scores that reflect their likelihood of loan repayment that is verifiable ex ante (Aghion and Tirole 1997). This lending technology improves the information produced by banks (Berger et al. 2005;Berger et al. 2011b) and loan availability (Berger and Frame 2007). ...
In this paper, we examine the influence of owner guarantees on loan rates. Other studies on the influence of business collateral have used survey and credit register data to establish this link. They support it with the pre-lending information theory and post-lending incentive theory and find that the latter predominates the former. Thus, we measure observed and unobserved risks on bank lending spreads negotiated over the counter to show the co-existence of both theories. The main findings and robustness tests show that owner guarantees reduce bank lending spreads for safe but not risky firms, supporting the pre-lending information theory rather than the post-lending incentive theory. These findings underscore the role of owner guarantees in allaying the information problems the bank confronts prior to lending.
... Additional work on similar models includes Kovác and Mylovanov (2009), who study the gap in performance between randomized and deterministic mechanisms, and Ambrus and Egorov (2017), who study a principal who can add additional nonmonetary costs to incentivize more preferred decisions. Aghion and Tirole (1997) and Szalay (2005) consider models in which one or more of the principal and the agent may expend effort to observe a signal about the state. For multiple decisions, Frankel (2014) considers maxmin robust delegation and Kleiner (2023) studies Bayesian optimal mechanisms. ...
This paper studies delegation in a model of discrete choice. In the delegation problem, an uninformed principal must consult an informed agent to make a decision. Both the agent and principal have preferences over the decided-upon action which vary based on the state of the world, and which may not be aligned. The principal may commit to a mechanism, which maps reports of the agent to actions. When this mechanism is deterministic, it can take the form of a menu of actions, from which the agent simply chooses upon observing the state. In this case, the principal is said to have delegated the choice of action to the agent. We consider a setting where the decision being delegated is a choice of a utility-maximizing action from a set of several options. We assume the shared portion of the agent's and principal's utilities is drawn from a distribution known to the principal, and that utility misalignment takes the form of a known bias for or against each action. We provide tight approximation analyses for simple threshold policies under three increasingly general sets of assumptions. With independently-distributed utilities, we prove a 3-approximation. When the agent has an outside option the principal cannot rule out, the constant approximation fails, but we prove a -approximation, where is the ratio of the maximum value to the optimal utility. We also give a weaker but tight bound that holds for correlated values, and complement our upper bounds with hardness results. One special case of our model is utility-based assortment optimization, for which our results are new.
... 27 Such principal-agent relationship might also represent that of manager-board of directors, advisor-student, worker-supervisor, consultant-firm and so on; see Aghion and Tirole (1997); Armstrong and Vickers (2010) and more recently Che, Dessein, and Kartik (2013). Note that relative to the literature on project choice, we have flipped the identity of "principal" and "agent" to be consistent with the rest of the paper. ...
We provide a unified analysis of how dynamic information should be designed in optimal stopping problems: a principal controls the flow of information about a payoff relevant state to persuade an agent to stop at the right time, in the right state, and choose the right action. We further show that for arbitrary preferences, intertemporal commitment is unnecessary: optimal dynamic information designs can always be made revision-proof.
... Another reason why a manager may wish to override an algorithm is that market conditions change in ways not encoded by the algorithm. Managers' ability to predict and adapt to changes in market conditions is viewed as essential in the internal organization of firms (Aghion & Tirole (1997), Bloom et al. (2021)). I introduce demand variation in the form of a marketwide shifter, θ, and consider algorithms that cannot directly respond to changes in this shifter. ...
... However, in practice, the central government has access to a wider range of resources, while the local government often has a better understanding of local environmental and social conditions. This can lead to a separation between "formal authority" and "real authority" within the organization, as pointed out by Max Weber [40] and Aghion [41]. Asymmetric information plays a crucial role in this divergence. ...
Due to the challenges of implementing environmental responsibility, sustainable development is often criticized for its promise to “square the circle”. This paper incorporates sociological theories into operational research to enhance our understanding of the issue. It proposes a framework for evaluating eco-efficiency that captures the decision-making process from a macro perspective rather than focusing on a single technique or employing a multimethodology. By utilizing 272 Chinese cities as case studies, the evaluation process is effectively implemented. From three perspectives - region, city size, and policy - we draw some interesting conclusions. Finally, a vision for future research is presented in the concluding section.
... Second, and as the central tenet of agency theory, the owners of resources have a critical authority to determine how to delegate, individually or collectively, the use of their resources to another person, an agent, so that the resources can be used more effectively (Aghion & Tirole, 1997;Hart, 2017). Being consented to by the owners and often institutionalised in organisations or nations, the agent(s) can downward delegate (or distribute) their using authority. ...
... Second, and as the central tenet of agency theory, the owners of resources have a critical authority to determine how to delegate, individually or collectively, the use of their resources to another person, an agent, so that the resources can be used more effectively (Aghion & Tirole, 1997;Hart, 2017). Being consented to by the owners and often institutionalised in organisations or nations, the agent(s) can downward delegate (or distribute) their using authority. ...
This paper, among many other papers of the author, aims at developing and testing the resource-based view theory of leadership.
... Second, and as the central tenet of agency theory, the owners of resources have a critical authority to determine how to delegate, individually or collectively, the use of their resources to another person, an agent, so that the resources can be used more effectively (Aghion & Tirole, 1997;Hart, 2017). Being consented to by the owners and often institutionalised in organisations or nations, the agent(s) can downward delegate (or distribute) their using authority. ...
Leadership: a new approach
Note: The original title of the paper is indeed "The right approach to theorising and practising leadership: A proposal". The term "right" here has a dual meaning. First, right refers to what people can morally do. Second, right means correct or, at least, not the wrong way.
... Artificial intelligence (Acemoglu, 2011) represents the most important output of the fourth industrial revolution due to its versatility in the military, industrial, economic and technical fields, medical, educational and service applications. (Aghion, 1997) With the massive and rapid technological development and the changes the world is witnessing in light of the fourth industrial revolution (Antonin, 2017), artificial intelligence will be the engine of progress, growth and prosperity during the next few years, and it and its innovations can establish a new world that may It now seems like a fantasy. ...
Our study aims to know the impact of the application of artificial intelligence on the economic performance of the institution, by studying the relationship between the application of artificial intelligence and economic performance indicators represented in the rate of profit development and the rate of development of services provided to the customer, as our study was projected on the Onpassive institution during the period (2018-2023), Using the multiple linear regression method through the statistical program (EVIEWS9), the study finally concluded that there is a relationship between the application of artificial intelligence and the rate of development of profits, and the existence of a positive relationship between the application of artificial intelligence and the rate of development of services provided to the customer.
... On one side, there are positive effects of high ownership concentration on firm value, as a higher stake is associated with more monitoring behaviour and owners can apply higher pressure to management through a threat of exit. On the other side, high ownership concentration can have a detrimental effect on firm value when it leads to over-monitoring (Aghion, Tirole 1997;Burkart et al. 1997), the misuse of power by large blockholders (Bhojraj, Sengupta 2003), or liquidity constraints (Bolton, von Thadden 1998;Edmans 2009). ...
Aim: This paper aims to understand the effects of between ownership concentration on firm risk and value. Design / Research methods: The author focuses on the largest publicly listed 91 German corporations in the time period 2010 to 2021. The resulting sample contains between 928 and 1051 observations and is analysed through a pooled OLS regression analysis. Ownership concentration is measured in terms of the number of blockholders, the size of the largest shareholder, and the Herfindahl Index of the ten largest shareholders. Firm value is captured with Tobin’s Q and firm risk is computed as the annualised daily stock price volatility. Conclusions / Findings: It is found that ownership concentration affects firm risk significantly negatively. Moreover, results suggest an inverse U-shape relationship between ownership concentration and firm value. This relationship can be explained by combining the negative effects of rising ownership concentration on firm risk with its implications for the creation of firm value. Originality / Value of the article: The German market has used to have a network-like structure with a concentrated ownership structure. However, over the past two decades, it transformed towards a more Anglo-Saxon-like and market-based structure with a rather dispersed ownership structure. Furthermore, factors which govern the relationship between ownership concentration are used to explain parts of the relationship between firm value and ownership concentration in a new way, thereby adding value to understanding the latter, highly debated, relationship.
... Traditionally, organizations have entrusted hierarchically superior managers to evaluate people within their scope of control (Barnard 1968). There is, however, a good chance for such evaluations to be inaccurate; managers can be biased, have limited information about the person they evaluate, and lack the necessary (often local) knowledge (Aghion and Tirole 1997). Peer evaluations are an alternative to managerial evaluations that many organizations have adopted to grapple with some of these challenges. ...
Peer evaluations place organizational members in a dual role: they evaluate their peers and are being evaluated by their peers. We theorize that when evaluating their peers, they anticipate how their evaluations will be perceived and adjust their evaluations strategically to be evaluated more positively themselves when their peers assess them. Building on this overarching claim of role duality resulting in strategic peer evaluations, we focus on a dilemma that evaluating members face: they want to leverage their evaluations of peers to portray themselves as engaged and having high standards, but at the same time, they must be careful not to offend anyone as doing so may cause retaliation. We suggest that organizational members about to be evaluated resolve this dilemma by participating in more peer evaluations but carefully targeting which evaluations they participate in. We test our theory by analyzing peer evaluations on Wikipedia, supplemented by in-depth semistructured interviews. Our study informs research on peer evaluation and organizational design by revealing how being an evaluator and evaluated can make evaluations more strategic.
Supplemental Material: The e-companion is available at https://doi.org/10.1287/orsc.2021.15302 .
... And yet economics seemed to partake in the policy discourse mostly through its traditional, narrow lens of cost-benefit trade-offs denominated in dollar terms, most glaringly in debates over the statistical 57 Dryzek and List, 2003. 58 For example, Aghion and Tirole (1997) and Acemoglu and Robinson (2006). 59 Sugden, 2018b. ...
The contributions of economists have long included both positive explanations of how economic systems work and normative recommendations for how they could and should work better. In recent decades, economics has taken a strong empirical turn as well as having a greater appreciation of the importance of the complexities of real‐world human behaviour, institutions, the strengths and failures of markets, and interlinkages with other systems, including politics, technology, culture and the environment. This shift has also brought greater relevance and pragmatism to normative economics. While this shift towards evidence and pragmatism has been welcome, it does not in itself answer the core question of what exactly constitutes ‘better’, and for whom, and how to manage inevitable conflicts and trade‐offs in society. These have long been the core concerns of welfare economics. Yet, in the 1980s and 1990s, debates on welfare economics seemed to have become marginalised. The articles in this Fiscal Studies symposium engage with the question of how to revive normative questions as a central issue in economic scholarship.
... It can also reduce the costs of disagreement compared with the alternative resolution of disputes by third parties through arbitration or litigation. Nevertheless, careful consideration must be given when curtailing delegation via reversion, as this can curb the initiative of the steering committees to engage in the search for solutions that maintain the adaptive efficiency of the alliance (Aghion and Tirole 1997). It can also lead to the counterparty shading in its efforts tied to the decisions (Hart and Moore 2008). ...
Steering committees are pivotal for governing complex collaborations by consensus to facilitate coordination and knowledge sharing. Although consensus-based governance promotes mutuality, it can also cause deadlocks, stalling expeditious decision making. We examine the conditions under which alliance partners delegate decision-making authority to steering committees as well as the conditions under which authority over discordant matters can be relocated to one of the alliance partners. We argue that joint coordination concerns increase the likelihood of authority delegation, whereas the higher costs and stakes associated with decision stalemates provide grounds for authority reversion. Empirical analyses of strategic alliances in the biopharmaceutical industry support our arguments. Our paper demonstrates the versatility of contractually defined administrative interfaces in alliance governance, allowing partners to coordinate bilaterally and adapt hierarchically as and when required.
... Then, we present our empirical predictions. In Supplementary Appendix B, we also develop a simple model, based on Aghion and Tirole (1997), where our predictions are formally derived. ...
Research Summary
Limited liability enables corporate parents to avoid financial responsibility of their subsidiaries. However, courts can disregard separate legal personality, “pierce the corporate veil,” and impose the debts of a subsidiary on its parent—an exception referred to as “enterprise liability.” We argue that in countries with weak enterprise liability, groups can better compartmentalize risks by incorporating more of their units as legally independent subsidiaries. Weaker enterprise liability may also induce headquarters to delegate more decision‐making authority to their subsidiaries, invest more, and expand faster, although failure rates could rise. Using data from 16 countries across the Americas, Asia, and Europe, we provide evidence supporting these predictions. This paper highlights two channels—risk compartmentalization and subsidiary autonomy—through which limited liability laws affect organizational outcomes.
Managerial Summary
Limited liability is a key attribute of the corporate form. However, when the owner of a corporation is another corporation (as in corporate groups), a key justification for limited liability—to protect small, passive investors from unlimited losses—is severely weakened. We examine how variation in parent limited liability protections for subsidiaries across countries affect firm boundaries, internal organization, and performance. In countries with strong limited liability protections, groups partition their assets more finely into legally independent subsidiaries and grant their subsidiaries more autonomy. They also invest more and grow faster, although they experience higher rates of significant revenue declines. Our findings suggest that limited liability laws play a central role in shaping organizational structure and performance.
Pengawasan persaingan usaha yang efektif dan kepastian hukum adalah faktor penting dalam menciptakan pasar yang adil dan kompetitif. Tantangan dalam pengawasan persaingan usaha di Indonesia dan mengusulkan solusi untuk meningkatkan kepastian hukum. Tantangan utama termasuk regulasi yang tidak memadai, implementasi yang tidak konsisten, dan keterbatasan sumber daya di lembaga pengawas. Solusi yang diusulkan mencakup penguatan regulasi, peningkatan kapasitas pengawas, dan kolaborasi dengan pemangku kepentingan.
This paper argues that algorithmic management should be conceptualised as a form of commodified and outsourced authority over employees. Drawing on an interdisciplinary framework that integrates insights from legal theory, organisational studies, and social computing, I advance a theoretical model in which IT companies that design, sell, and operate “bosses-as-a-service” systems effectively share with employers (parts of) authority over employees within subordinate employment relationships. Overall, this paper aims to critically engage with the existing literature by highlighting regulatory lacks in addressing algorithmic management as a commodified and outsourced form of authority.
In the information overload regime, human communication tasks such as responding to email are well-modeled as priority queues, where priority is determined by a mix of intrinsic motivation and extrinsic motivation corresponding to the task's importance to the sender. We view priority queuing from a principal-agent perspective, and characterize the effect of priority-misalignment and information asymmetry between task senders and task receivers in both single-agent and multi-agent settings. In the single-agent setting, we find that discipline can override misalignment. Although variation in human interests leads to performance loss in the single-agent setting, the same variability is useful to the principal with optimal routing of tasks, if the principal has suitable information about agents' priorities. Our approach starts to quantitatively address the effect of human dynamics in routine communication tasks.
En este trabajo se propone una aproximación a la deferencia judicial a través del modelo económico de delegación. En un entorno de información asimétrica existe un trade-off entre discrecionalidad y deferencia en la supervisión o monitoring ex post. La delegación que origina la relación principal-agente produce costes, pero también beneficios. Es más, incluso cuando la supervisión o el control ex post estricto o no deferente por parte de los accionistas es eficiente, constituye ex ante una amenaza de expropiación, lo que reduce la iniciativa empresarial y las inversiones no contractuales. La revisión judicial puede analizarse también siguiendo este modelo. No siempre la revisión judicial estricta es la más deseable, porque hay entornos en el que es más beneficioso garantizar un ámbito de discrecionalidad o de impunidad. Con todo, la manera es efectiva de lidiar con la relación principal-agente no es a través de la revisión judicial, sino a través de los incentivos contractuales
This study investigates the factors contributing to COVID vaccine hesitancy. Vaccine hesitancy has commonly been attributed to susceptibility to misinformation and linked to particular socio-demographic factors and personality traits. We present a new perspective, emphasizing the interplay between individual cognitive styles and perceptions of public health institutions. In January 2020, before the COVID-19 pandemic, 318 participants underwent a comprehensive assessment, including self-report measures of personality and clinical characteristics, as well as a behavioral task that assessed information processing styles. During 2021, attitudes towards vaccines, scientists, and the CDC were measured at three time points (February–October). Panel data analysis and structural equation modeling revealed nuanced relationships between these measures and information processing styles over time. Trust in public health institutions, authoritarian submission, and lower information processing capabilities together contribute to vaccine acceptance. Information processing capacities influenced vaccination decisions independently from the trust level, but their impact was partially mediated by authoritarian tendencies. These findings underscore the multifactorial nature of vaccine hesitancy, which emerges as a product of interactions between individual cognitive styles and perceptions of public health institutions. This novel perspective provides valuable insights into the underlying mechanisms that drive this complex phenomenon.
The purpose of this undertaking was to determine the imbalances and opportunities of multitasking of teachers in their workplace. Teachers have one of the most important jobs in the world. They fill in the shoes of too many different professions like a parent, disciplinarian, judge, administrator, academic experts, mentor, and more, and probably all-time. It’s no secret that our teachers get so many things done that it’s no wonder that they’ve become experts in multitasking. This study evaluates the imbalances and opportunities of multitasking of 60 teachers handled general education and major subject. Purposive surveys a descriptive quantitative and qualitative method was applied survey and interviews will be conducted; to rationalize the scope of work, were employed as research instruments to collect responses on imbalances and opportunities of multitasking. The research findings showed the majority of teachers strongly agreed with the opportunities of multitasking in terms of Integration of Diverse Work, and imparting knowledge to co-instructor. It further revealed that most of the respondents that practice multitasks were men. To divert the emphasis on the imbalances of multitasking, the administration should be able to motivate instructor in terms of giving honoraria to those who extend their working hours and acknowledging them also during the ceremonial events.
The vertical environmental reform in China has led to the change of environmental management system from territorial management model to vertical management model. This study uses the data of 263 prefecture-level cities in China to examine the effects of China’s vertical environmental reform on pollutant emissions, including industrial sulfur dioxide, wastewater emissions, and industrial fumes emissions. The findings demonstrate that vertical environmental reform resulted in a reduction in industrial sulfur dioxide, wastewater emissions, and industrial fumes emissions. And the governance effects is gradually enhanced with the passage of time, which are long-lasting effects. The above conclusions are still valid after a series of robust estimates including mitigating selection bias, placebo test, changing the dependent variables, and mitigating heterogeneous treatment effects. According to heterogeneity analysis, the vertical environmental reform has reduced the increase of pollutants caused by financial pressure and official associations, and treats border pollution problems more effectively. Under the decentralized governance system, the implementation of vertical environmental management helps to reduce local pollutant emissions. This conclusion provides the latest evidence from China for the academic debate on the advantages and disadvantages of territorial environmental management and vertical environmental management and also provides policy implications for the government’s environmental governance.
هدف البحث الحالي إلى معرفة الدور الذي يحدثه الغموض الاستراتيجي في الصورة الذهنية للزبون الذي يتعامل مع شركة التامين الوطنية ، ولتحقيق أهداف البحث تم اعتماد المنهج الوصفي التحليلي اذ تم بناء استبانة مكونة من (23) فقرة، وتم سحب عينة عشوائية بحيث تكونت من (85) من المدراء والعاملين ذوي الخبرة في مقر شركة التامين الوطنية ، وتم تحليل النتائج بالاعتماد على الحزمة الاحصائية (SPSS,v25) وادوات الاحصاء الوصفي مثل الوسط الحسابي ومعامل الاختلاف والانحراف المعياري ، كانت النتائج تشير الى ان شركة التامين الوطنية في الوقت الحالي لديها اهتمام كبير بالغموض الاستراتيجي بوصفة طريقة لايصال ما ترغب ان يعرفه الزبون مع الحفاظ على سرية العمليات الداخلية وبناء صورة ذهنية ايجابية اتجاه التعامل مع الخدمات التأمينية وان الغموض الاستراتيجي يحدث اثرا في بناء الصورة الذهنية للزبون وتمثلت ابرز التوصيات بضرورة تبني ادارة شركة التامين للغموضالاستراتيجي في ايصال رسائل ايجابية الى الزبائن واستعمال وسائل تواصل متعددة للترويج عن الخدمات التأمينية وتطوير القطاع التأميني وبناء نظرة ايجابية اتجاه شركات التامين كونها من القطاعات الاقتصادية المهمة.الكلمات المفتاحية: الغموض الاستراتيجي، الصورة الذهنية ، شركة التامين الوطنية
The purpose of this study is to empirically evaluate the direct and interaction effects of formal and relational control mechanisms on franchisor performance. The causes of performance in franchise networks have been overlooked. Therefore, this article juxtaposes the influence of authoritative, contractual, and relational mechanisms on network performance depending on whether franchisors participate in unilateral or mutual decision making with their franchisees. Using primary data from Germany and Switzerland, it is found that both mechanisms of contractual and relational control enhance the profitability and efficiency of franchise networks either when used individually or in combination, while authoritative control diminishes performance, and that its negative performance effect is strengthened with more contractual control, but positively moderated by relational control.
RESEARCH OBJECTIVE: The main task involves an attempt to characterize a disordered law and concerns characterizing the most important aspects of the disorder. THE RESEARCH PROBLEMS AND METHODS: The main task of the article are terminological and conceptual arrangements. Therefore, the method of linguistic analysis was used, adapting conceptions knew in theory and philosophy of law to the needs of the analysis of the concept of the disorder. THE PROCESS OF ARGUMENTATION: Starting from the analysis of the main, known theories of law, concepts and ideas, various cases of disorder of the legal system are identified, both in the political, ethical and purely formal aspects. RESEARCH RESULTS: The analysis allowed to identify and reconstruct certain specific types of disorder. Law, on many levels – from formal to merits of law – can be a source of moral and ideological chaos. Law may serve intentional destabilization of social life. CONCLUSIONS, INNOVATIONS, AND RECOMMENDATIONS: Traditionally law is associated with order and consistency rather than disorder and chaos. Nevertheless, the disorder and chaos can be seen as a real and factual part of the law.
This paper presents the results of laboratory experiments designed to study the effectiveness of leadership as a way to improve efficiency in team production. In a three-player minimum effort game framework, the research compares either endogenous or exogenous leadership (in the former, the leader is chosen in an auction, and in the latter, the leader is randomly selected) with a control treatment where no leadership is considered. Although contributions do not seem to be significantly different between both leadership treatments, the effort levels found are in fact higher with exogenous (random) leadership than in the control treatment. Conversely, this effect is not found with endogenous (intentional) leadership.KeywordsLeadershipProductive resourcesTeamworkOrganizational designsControl treatment