Knowledge creation and control in organizations

The incremental innovations that underly much of modern economic growth typically involve changes to one or more components of a complex product. This creates a tension. On the one hand, a principal would like an agent to contribute innovative components. On the other hand, ironing out incompatibilities between interdependent components can be a drain on the principal's energies. The principal can conserve her energies by tightly controlling the innovation process, but this may inadvertently stifle the agent's incentive to innovate. We show precisely how this tension betweencreating knowledge and controlling knowledge shapes organizational forms.The novel concepts introduced are illustrated with case studies of the flatpanel cathode ray tube industry and Boeing's recent location decisions.incremental innovation, incomplete contracts, imperfect substitutability, appropriability, control

The Composition of Compensation Policy: From Cash to Fringe Benefits

Cet article développe un modèle principal-agent pour analyser la composition optimale des politiques de rémunérations en présence d'incitations monétaires et non monétaires. On caractérise les bénéfices non monétaires comme des symboles pour capturer un ensemble large de compensations non monétaires telles que les avantages en natures, le statut, l'identité ou même les sanctions. Nous montrons que lorsque les préférence des agents sont de connaissance commune les incitaions non monétaires sont toujours plus efficaces que les incitations monétaires. Nous caractérisons également la compostion optimale du schéma de rémunération lorsque le principal ne connaît qu'imparfaitement les préférences des agents. En particulier, nous montrons que des avantages en nature fixes combinés à un salaire variable sont plus rentables pour le principal dans ce contexte.

Second ECOOP Workshop on Precise Behavioral Semantics (with an Emphasis on OO Business Specifications)

Business specifications are essential to describe and understand businesses (and, in particular, business rules) independently of any computing systems used for their possible automation. They have to express this understanding in a clear, precise, and explicit way, in order to act as a common ground between business domain experts and software developers. They also provide the basis for reuse of concepts and constructs ("patterns") common to all - from finance to telecommunications -, or a large number of, businesses, and in doing so save intellectual effort, time and money. Moreover, these patterns substantially ease the elicitation and validation of business specifications during walkthroughs with business customers, and support separation of concerns using viewpoints.Comment: 21 pages, 0 figure

Trade Agreements as Endogenously Incomplete Contracts

We propose a model of trade agreements in which contracting is costly, and as a consequence the optimal agreement may be incomplete. Inspite of its simplicity, the model yields rich predictions on the structure of the optimal trade agreement and how this depends on the fundamentals of the contracting environment. We argue that taking contracting costs explicitly into account can help explain a number of key features of real trade agreements.Trade Agreement; WTO; GATT; Endogenously Incomplete Contracts