EconPapers    
Economics at your fingertips  
 

Does Incentive Pay Substitute for Monitoring? The Role of Managerial Skills and Span of Control

Filippo Belloc, Stefano Dughera (s.dughera@unito.it) and Fabio Landini (fabio.landini@unipr.it)

Department of Economics University of Siena from Department of Economics, University of Siena

Abstract: We model the conditions under which firm agency issues are tackled through incentive pay as opposed to monitoring. The model shows that a larger span of control makes labor surveillance less effective as an effort extraction mechanism, whereas managerial skills increase the opportunity cost of monitoring. As a result, the use of pay-for-performance schemes is more likely in firms with a lower staff-to-managers ratio and more skilled managers. An empirical analysis on firm-level Italian data produces results coherent with our theoretical predictions. Taken together, our results help to explain the highly heterogeneous use of incentive contracts among firms

Keywords: Incentive pay; Managerial ability; Span of control (search for similar items in EconPapers)
JEL-codes: C72 J33 J41 L23 M52 (search for similar items in EconPapers)
Date: 2023-06
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-hrm and nep-lma
References: Add references at CitEc
Citations:

Downloads: (external link)
http://repec.deps.unisi.it/quaderni/901.pdf (application/pdf)

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:usi:wpaper:901

Access Statistics for this paper

More papers in Department of Economics University of Siena from Department of Economics, University of Siena Contact information at EDIRC.
Bibliographic data for series maintained by Fabrizio Becatti (fabrizio.becatti@unisi.it).

 
Page updated 2024-10-06
Handle: RePEc:usi:wpaper:901