Resource title

The Benefit and Cost of Winner Picking: Redistribution Vs Incentives

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Resource description

The Benefit and Cost of Winner Picking: Redistribution Vs Incentives B A multi-divisional firm can engage in "winner-picking" to redistribute scarce funds efficiently across divisions. But there is a conflict between rewarding winners (investing) and producing resources internally to reward winners (incentives). Managers in winning divisions are tempted to free-ride on resources produced by managers in loosing divisions whose incentives to produce resources, anticipating their loss, are also weakened. Corporate headquarter's investment and incentive policy are therefore inextricably linked and have to be treated as jointly endogenous. The analysis links corporate strategy, compensation and the value of diversification to the characteristics of multi-divisional firms.

Resource author

Axel Gautier, Florian Heider

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/22852

Resource license

Adapt according to the presented license agreement and reference the original author.