Management Accounting Section Midyear Meeting

The Effect of Career Concerns on Team Assignment

• In Event: Managerial Topics in Analytical Research

Abstract

We study the effect of career concerns on team assignment in a setting where the principal assigns multiple agents of different type to project teams. In our model, agents have explicit effort incentives from performance-dependent compensation contracts and implicit effort incentives from career concerns. We find that the characteristics of the available performance-related information are important determinants of organizational design. For example, the principal prefers uniform teams over mixed teams if soft information about the agent’s ability is noisy.

Authors

• Konstantin Flassak, LMU Munich School of Management

• Christian Hofmann, Ludwig-Maximilians-Universitaet