Visionaries, Managers, and Strategic Direction

Julio Rotemberg and Garth Saloner

RAND Journal of Economics, 2000, vol. 31, issue 4, 693-716

Abstract: Incentives for profitable innovation may be enhanced by employing a "visionary" CEO whose "vision" biases him in favor of certain projects. CEO vision changes which projects get implemented and thus affects the incentives of employees who can be compensated for their innovative ideas only when they become embodied in implemented projects. Profits may be enhanced further by letting objective managers decide which projects to investigate even though their decisions can depart from the firm's "strategy" by differing from those the CEO would have made.

Date: 2000
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