Management Turnover, Strategic Ambiguity and Supply Incentives

Pasquier Nicolas () and Toquebeuf Pascal ()
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Pasquier Nicolas: Université Grenoble Alpes, CNRS, INRA, Grenoble INP, GAEL, 38000 Grenoble, France
Toquebeuf Pascal: Université Grenoble Alpes, CNRS, INRA, Grenoble INP, GAEL, 38000 Grenoble, France

The B.E. Journal of Theoretical Economics, 2023, vol. 23, issue 1, 121-154

Abstract: When a firm appoints a new manager, it reopens the possibility of new contractual friction with its partners. We explore strategic ambiguity as a potential for friction with a supplier. The firm’s new manager probably has fuzzy expectations about the supplier’s strategy. An optimistic manager weights favorable strategies more heavily than detrimental ones, whereas a pessimistic manager does the opposite. We show that the manager’s degree of optimism is critical: above a threshold, it can cause the supplier to change the timing of its contracting and increase its profits. We also find that this threshold degree of optimism depends on the degree of product substitution: it is more stringent with imperfect substitutes than with perfect substitutes or unrelated goods.

Keywords: vertical contracting; strategic ambiguity; ambiguity attitude (search for similar items in EconPapers)
JEL-codes: D8 L14 L22 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1515/bejte-2021-0070

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