Managers, not markets

Managers, Mentoring, and Internal Labor Markets

We propose a theory of production and allocation of human capital in firms that focuses on the role of line managers, who both invest time to mentor junior employees, and acquire information about the juniors’abilities that is valuable for job assignments. We argue that this dual role of managers implies that internal labor markets and incentive contracts for managers must be determined jointly...

Managers, Investors, and Crises: Mutual Fund Strategies in Emerging Markets

Managers and their not-so rational decisions

Today's corporate environment requires managers to be excellent decision makers. Their ability to make fast, widely-supported, and effective decisions will, in large part, shape the performance of their firms. In this article, we describe two cognitive systems that influence decision making. System 1 refers to a process that is fast, effortless, and intuitive. System 2 is a slow, controlled, an...

Daily life, not markets: customer-centered design

‘‘Customer-centered,’’ ‘‘user experience,’’ ‘‘delighting customers,’’ and ‘‘user-friendly’’ have become mantras for many businesses in recent years. They describe important goals that, if achieved, can lead to competitive success. But the goals are rarely realized and these phrases are acquiring an unintended irony, or worse, the empty ring of a marketing slogan representing no tangible benefit...

Is corporate control effective when managers face investment timing decisions in incomplete markets?

This paper presents a model of investment timing by risk averse managers facing incomplete markets and corporate control. Managers are exposed to idiosyncratic risks due to the dependence of their compensation on investment payoffs which are not spanned by other assets. We show that risk averse managers invest earlier than welldiversified shareholders would prefer, leading to significant agency...