Alves, G, Blanchard, P, Burdin, G orcid.org/0000-0003-3525-5583 et al. (2 more authors) (2022) Like principal, like agent? Managerial preferences in employee-owned firms. Journal of Institutional Economics, 18 (6). pp. 877-899. ISSN 1744-1374
Abstract
The relationship between firms’ owners and managers is a quintessential example of costly principal–agent interaction. Optimal design of monetary incentives and supervision mechanisms are the two traditional ways of reducing agency costs in this relationship. In this paper, we show evidence which is consistent with a third mechanism: firms have managers whose economic preferences are aligned with owners' interests. We uncover differences in economic preferences between managers employed in firms controlled by two distinct classes of ‘patrons’: employee-owned firms (worker cooperatives) and conventional investor-owned firms. In a high-stakes lab-in-the-field experiment, we find that co-op managers are less risk-loving and more altruistic than their conventional counterparts. We do not observe differences between the two groups in terms of time preferences, reciprocity, and trust. Our findings are consistent with existing evidence on worker cooperatives, such as their tendency to self-select into less risky industries and their compressed compensation structures.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © The Author(s), 2021. Published by Cambridge University Press on behalf of Millennium Economics Ltd. This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (https://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited. |
Keywords: | Economic preferences; lab-in-the-field experiment; managers; worker cooperatives |
Dates: |
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Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Business (Leeds) > Economics Division (LUBS) (Leeds) |
Depositing User: | Symplectic Publications |
Date Deposited: | 18 Oct 2021 15:49 |
Last Modified: | 29 Jan 2023 14:32 |
Status: | Published |
Publisher: | Cambridge University Press |
Identification Number: | 10.1017/S1744137421000783 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:179236 |
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