Firm-fit transparency and incentives

Abhishek Ramchandani

Economics Letters, 2024, vol. 236, issue C

Abstract: Firms vary in whether they are transparent with employees about their “fit” within the firm. We build an analytical model to provide an explanation for these variations. The trade-off in our setting is that transparency motivates the “good-fit” employee and demotivates the “bad-fit” employee. Our main result shows that a firm commits to a policy of transparency (secrecy) only when employee success is less (more) informative of effort for a good-fit employee. We also establish that transparency is generally suboptimal when it can induce a good-fit employee to become complacent.

Keywords: Employee-firm fit; Transparency; Contracting; Complacency; Output-effort informativeness (search for similar items in EconPapers)
JEL-codes: D82 D86 M12 M52 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165176524000879
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:236:y:2024:i:c:s0165176524000879

DOI: 10.1016/j.econlet.2024.111604

Access Statistics for this article

Economics Letters is currently edited by Economics Letters Editorial Office

More articles in Economics Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().