Distorted performance measurement and relational contracts
نویسندگان
چکیده
This paper analyzes the use of alternative performance measures in an agency model in which contracting incorporates both formal and informal agreements. It is shown that under a proper use of verifiable and unverifiable performance measures, the two types of contracts are complements, regardless of the principal’s fallback position. The analysis therefore contrasts earlier results of the literature, and provides a rationale for the application of subjective performance information, as it is frequently incorporated in strategic performance measurement systems.
منابع مشابه
Developing a framework for studying and evaluating the types of psychological contracts in the context of relationship marketing
Nowadays, belief in the criteria and conditions of interactions with an organization to promote customer relationships is somehow tied to the organizational performance, and its final goal is of great importance. In the literature on organizational behavior, this belief is defined as the “psychological contract”. The intention of this mixed research is to identify and discover the contents of p...
متن کاملA Systematic Review in The Process of Formation, Development and Content of Nurses' Psychological Contracts
Introduction: Psychological contract plays a pivotal role in defining employee-organization relationships. Given the complex concept of psychological contracts, and the existence of scattered and diverse information on how to form and develop, and identify the contents of nurses 'psychological contracts in previous research, in this study, the concept of nurses' psychological contract is system...
متن کاملCooperation and Mistrust in Relational Contracts
Work and trade relationships are often governed by relational contracts, in which incentives for cooperative action today stem from the prospective future benefits of the relationship. In this paper, we study how reductions in clarity about the financial consequences of actions, induced by incomplete information about the costs of providing quality, affect relational contracts in buyer-seller r...
متن کاملCompetition and Relational Contracts: The Role of Unemployment as a Disciplinary Device
Competition and Relational Contracts: The Role of Unemployment as a Disciplinary Device When unemployment prevails, relations with a particular firm are valuable for workers. As a consequence, a worker may adhere to an implicit agreement to provide high effort, even when performance is not third-party enforceable. But can implicit agreements – or relational contracts – also motivate high worker...
متن کاملRelational Incentive Contracts
Standard incentive theory models provide a rich framework for studying informational problems but assume that contracts can be perfectly enforced. This paper studies the design of self-enforced relational contracts. I show that optimal contracts often can take a simple stationary form, but that self-enforcement restricts promised compensation and affects incentive provision. With hidden informa...
متن کامل