Reputable Friends as Watchdogs: Social Incentives and Modes of Governance
نویسندگان
چکیده
This paper studies the e¤ect of social ties on governance. Social ties are per se neutral and merely act as incentive bridges that transmit incentives across individuals. Whether this improves or undermines governance depends on what incentives are transmitted. We demonstrate this in a delegated monitoring model where the supervisor is friends with the agent and cares about social recognition. Two basic modes of governance emerge, authority and loyalty, which di¤er in whether they encourage or discourage social ties. This dichotomy reconciles opposing views on social ties and governance, and provides new perspectives on family rms, gray directors, business networks, and organizational culture. JEL Classi cation: D82, D86, G30
منابع مشابه
Authority versus Loyalty: Social Incentives and Modes of Governance
This paper examines the e¤ects of social ties on governance. Social ties are per se neutral and merely act as incentive bridges that transmit incentives between individuals. Whether such transmission of incentives improves or undermines governance depends on the particular incentives transmitted. We demonstrate this through a delegated monitoring model where the supervisor is friends with the a...
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