Coordination under the Shadow of Career Concerns

Alexander Koch and Albrecht Morgenstern ()
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Albrecht Morgenstern: Federal Ministry of Finance

No 4039, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: To innovate, employees need to develop novel ideas and coordinate with each other to turn these ideas into better products and services. Work outcomes provide signals about employees' abilities to the labor market, and therefore career concerns arise. These can both be 'good' (enhancing incentives for effort in developing ideas) and 'bad' (preventing voluntary coordination). Our model shows how the firm designs its explicit incentive system and organizes work processes to take these conflicting forces into account. The comparative statics results suggest a link between the increased use of teams and recent changes in labor market returns to skills.

Keywords: career concerns; knowledge work; reputation; teams; group incentives (search for similar items in EconPapers)
JEL-codes: D86 J30 L14 L20 M12 O30 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2009-02
New Economics Papers: this item is included in nep-cta and nep-lab
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Published - published in: B.E. Journal of Theoretical Economics: Topics in Theoretical Economics , 2010, 10 (1), Article 10

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Journal Article: Coordination under the Shadow of Career Concerns (2010)
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