Salesforce Incentives, Market Information, and Production/Inventory Planning

Fangruo Chen

Management Science, 2005, vol. 51, issue 1, 60-75

Abstract: Salespeople are the eyes and ears of the firms they serve. They possess market knowledge that is critical for a wide range of decisions. A key question is how a firm can provide incentives to its salesforce so that it is in their interest to truthfully disclose their information about the market and to work hard. Many people have considered this question and provided solutions. Perhaps the most well-known solution is due to Gonik (1978), who proposed and implemented a clever scheme designed to elicit market information and encourage hard work. The purpose of this paper is to study Gonik's scheme and compare it with a menu of linear contractsÔa solution often used in the agency literatureÔin a model where the market information possessed by the salesforce is important for the firm's production and inventory-planning decisions.

Keywords: salesforce; incentives; asymmetric information; screening; production planning (search for similar items in EconPapers)
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (76)

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.1040.0217 (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:inm:ormnsc:v:51:y:2005:i:1:p:60-75

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().