Employee incentives to make firm specific investment: Implications for resource-based theories of corporate diversification

We argue that the risk associated with the value of a firm's core resources has an impact on employee decisions to make firm-specific investments, independent of the threat of opportunism that might exist in a particular exchange. We further explore mechanisms firms may adopt to mitigate the em...

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Bibliographic Details
Main Authors: WANG, Heli, Barney, Jay B.
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2006
Subjects:
Online Access:https://ink.library.smu.edu.sg/lkcsb_research/3456
https://ink.library.smu.edu.sg/context/lkcsb_research/article/4455/viewcontent/Employee_Incentive_2006_pv.pdf
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Institution: Singapore Management University
Language: English
Description
Summary:We argue that the risk associated with the value of a firm's core resources has an impact on employee decisions to make firm-specific investments, independent of the threat of opportunism that might exist in a particular exchange. We further explore mechanisms firms may adopt to mitigate the employee incentive problem stemming from the risk associated with core resource value. These arguments shed new light on resource-based theories of corporate diversification.