Logo
Munich Personal RePEc Archive

The Effect of External Incentives on Profits and Firm-Provided Incentives Strategy

Azar, Ofer H. (2003): The Effect of External Incentives on Profits and Firm-Provided Incentives Strategy. Forthcoming in: Journal of Socio-Economics

[thumbnail of MPRA_paper_4456.pdf]
Preview
PDF
MPRA_paper_4456.pdf

Download (181kB) | Preview

Abstract

The article examines the firm's choice of incentives when workers face additional incentives (“external incentives”) to those provided by the firm, such as building reputation that improves the workers' prospects with other employers, or satisfaction from working well. Surprisingly, the firm might find it optimal to increase the incentives it provides following an increase in external incentives. Even if the firm reduces its incentives, however, total incentives unambiguously increase, leading to higher effort and profits. This implies that firms should try to increase the external incentives that their workers face; I suggest several ways firms can do so.

Atom RSS 1.0 RSS 2.0

Contact us: mpra@ub.uni-muenchen.de

This repository has been built using EPrints software.

MPRA is a RePEc service hosted by Logo of the University Library LMU Munich.