Why Less Informed Managers May Be Better Leaders

Sergei Guriev and Anton Suvorov

No w0142, Working Papers from New Economic School (NES)

Abstract: Unlike the textbook model of a top manager being an omniscient planner, coordinator and monitor, the real life managers suffer from discontinuity, lack of systematic information collection and limited time for analysis and re?ection. Why do not business leaders set up their organizations in the way that would allow themselves to make informed choices based on thorough analysis? We argue that in some situations top managers may benefit from being less informed. In our model, additional information raises ex post flexibility of the decision-makers which may undermine the ex ante incentives of their subordinates to make specific investments. The subordinates expect less informed leaders to be more committed to the original strategy which increases the returns to the strategy-specific investments. We show that this effect is more likely to take place in more predictable environments; we also discuss how this effect depends on the hierarchical structure of the organization.

Keywords: leadership; commitment; organizational structure (search for similar items in EconPapers)
Pages: 21 pages
Date: 2010-04
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.nes.ru/files/Preprints-resh/WP142.pdf (application/pdf)

Related works:
Working Paper: Why Less Informed Managers May Be Better Leaders (2010)
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:abo:neswpt:w0142

Access Statistics for this paper

More papers in Working Papers from New Economic School (NES) Contact information at EDIRC.
Bibliographic data for series maintained by Vladimir Ivanyukhin ( this e-mail address is bad, please contact ).