Resource Transfer Efficiency Within Multibusiness Firms: The Effect of Dissimilarity in Managerial Specializations and Executive Compensations
The findings suggest two main conclusions: First, when optimality of a decision depends on exchange of information between specialists, and when there is some sort of competition between these specialists, differences in specializations could negatively affect efficiency of decisions in the absence of high powered incentives for specialists. This provides a qualification for the simple notion that specializations within an organization leads to higher efficiency. Second, behaviors on the part of divisional managers put a significant constraint on the actions by top management. This suggests that from an agency perspective, the actions taken by top management can better be understood if the constrain from middle management is accounted for in the analysis.
University of Illinois - Urbana-Champaign
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University of Illinois at Urbana-Champaign