Ownership and managerial competition: employee, customer, or outside ownership

Patrick Bolton and Cheng-Gang Xu

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper centres around the question of ownership of firms and managerial competition and how these affect managers and employees’ incentives to invest in human capital. We argue that employees’ incentives in human capital investment are affected by both ownership and competition since both ownership structure and competition provide bargaining chips to employees. Ownership provides protections which may improve or dull employees’ incentives for human capital investment. When there is fierce market competition and no lock-in the allocation of ownership does not play a role (as one might expect), provided that human and physical assets are sufficiently complementary. If asset complementarity is low, ownership matters even in the absence of lock-in. In general, the most efficient ownership arrangement is that which maximizes managerial competition inside the firm.

Keywords: Ownership; competition; incomplete contracts; human capital (search for similar items in EconPapers)
JEL-codes: D21 D23 D40 L20 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2001-03
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://eprints.lse.ac.uk/3749/ Open access version. (application/pdf)

Related works:
Working Paper: Ownership and Managerial Competition: Employee, Customer, or Outside Ownership (2001)
Working Paper: Ownership and Managerial competition: Employee, Customer, or Outside Ownership (1998)
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:ehl:lserod:3749

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().