Contracts offered by bureaucrats

“…Though we abstract from these issues in this paper, they must be taken into account to develop a more complete understanding of culture in organizations. 20 Although we assume resources are scarce in our model, this scarcity arises endogenously in Khalil, Kim, and Lawarrée (2013) as part of an optimal contract.…”

Section: Discussionmentioning

confidence: 99%

“…Although we assume resources are scarce in our model, this scarcity arises endogenously in Khalil, Kim, and Lawarrée (2013) as part of an optimal contract.…”

mentioning

confidence: 99%

Resources and culture in organizations

Prasad

Tomaino

2020

Economics Manag Strategy

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We look at how an organization's level of resources interacts with its culturethat is, its shared beliefs and preferences. We consider an organization where workers exert effort to develop projects. These projects (a) have externalities for other members, (b) compete for funds when resources are scarce, and (c) can be implemented in various ways, which members have beliefs and preferences over. When resources are plenty, so that all feasible projects are funded, workers' efforts are independent of each other and a coherent culture is optimal. By contrast, when resources are scarce, competition across workers with diverging beliefs or preferences (competing cultures) can be optimal. 1 | INTRODUCTION When thinking about motivation in organizations, economists tend to emphasize pay for performance, where a worker's pay is tied to outcomes that benefit the organization. In practice, however, organizations rely on a richer set of instruments to solve the motivation problem. One such instrument is the culture of the organization-that is, the extent to which beliefs and preferences are shared across members of the organization. The purpose of our paper is to provide an economic way to think about some aspects of how culture motivates workers. To see ways in which culture might serve as a motivational lever, consider the examples of the National Forest Service (NFS) and the National Park Service (NPS)-two U.S. government agencies with roughly similar functions, each responsible for managing large tracts of land. In the NFS, new recruits who are selected carefully, undergo rigorous training and are immediately indoctrinated in the ways of professional forest management. This ensures that their performance is always in line with the overarching goal of the organization. In fact, as Herbert Kaufman notes in his study of the NFS, foresters are if anything "too zealous in their conformance" toward organizational policy (see Kaufman, 1960, pp. 4, 5). We refer to such an organization, where members with shared beliefs and preferences work toward the same outcome, as one with a coherent culture. To compare, there is often conflict within the NPS over the proper way to manage these resources. Arguably, this is driven by an "inherent duality" in the self-stated purpose of the organization, which is to both "conserve the scenery and the natural and historic objects" whilst at the same time "providing for the [public's] enjoyment" of these natural resources. With proponents on both sides of this argument within the organization, a question as simple as "Should this section of trees be cut back to enable easier access to camping grounds?" can be hotly debated (Goodsell, 2011, pp. 111, 112.). Borrowing a phrase from James Q. Wilson in his book Bureaucracy (p. 92), we refer to this type of an organization, where members have diverging beliefs or preferences over outcomes, as one with competing cultures. These views held by members of an organization matter in business settings too. At Facebook, for example, disagreements over a plan to...

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“…Other models of bureaucrats regulating firms include Khalil, et al . [2013]. They model a bureaucrat who procures a good from a privately informed firm and who is given a fixed budget.…”

Section: Introductionmentioning

confidence: 99%

Delegation of Regulation*

Kundu

Nilssen

2020

The J Industrial Economics

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We discuss a government’s incentives to delegate regulation to bureaucrats. The government faces a trade‐off in its delegation decision: bureaucrats have knowledge of the firms in the industry that the government does not have, but at the same time, they have other preferences than the government. The preference bias and the private information interact to affect the incentives to delegate regulation. Allowing for constrained delegation, we introduce the concepts of weak and strict delegation. We find that bureaucratic discretion reduces with bureaucratic drift, while the effect of increased uncertainty about the firm’s technology depends on how that uncertainty changes.

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Contracts offered by bureaucrats

Cited by 16 publications

References 49 publications

Government Regulation, Altruistic Bureaucrats, and the Power of the Contract.

Government Regulation, Altruistic Bureaucrats, and the Power of the Contract.

Resources and culture in organizations

Delegation of Regulation*

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