EconPapers    
Economics at your fingertips  
 

Does Monitoring Increase Work Effort? The Rivalry with Trust and Loyalty

Bruno Frey

Economic Inquiry, 1993, vol. 31, issue 4, 663-70

Abstract: Principal-agent theory suggests that tighter monitoring will raise an agent's work effort and will be applied provided that transaction costs are low. However, when a psychological contract exists between principals and agents, the agents perceive increased monitoring as an indication of distrust and this induces them to reduce work effort. This 'crowding out effect'is likely to dominate when the relationship between principals and agents is personal, while the 'disciplining effect'is likely to dominate when the relationship is abstract, as in a competitive market setting. Empirical evidence from neighboring sciences and from an econometric study supports this proposition. Copyright 1993 by Oxford University Press.

Date: 1993
References: Add references at CitEc
Citations: View citations in EconPapers (129) Track citations by RSS feed

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:oup:ecinqu:v:31:y:1993:i:4:p:663-70

Ordering information: This journal article can be ordered from
http://www.oup.co.uk/journals

Access Statistics for this article

Economic Inquiry is currently edited by Preston McAfee

More articles in Economic Inquiry from Western Economic Association International Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().

 
Page updated 2022-10-01
Handle: RePEc:oup:ecinqu:v:31:y:1993:i:4:p:663-70