Arbeitspapier
Prosocial Managers, Employee Motivation, and the Creation of Shareholder Value
Milton Friedman has famously claimed that the responsibility of a manager who is not the owner of a firm is "to conduct the business in accordance with their [the shareholders'] desires, which generally will be to make as much money as possible." In this paper we argue that when contracts are incomplete it is not necessarily in the interest even of money maximizing shareholders to pick a manager who pursues this goal. We show in a formal model and in a series of lab experiments that choosing a manager who has a preference to spend resources for social causes can increase employee motivation. In turn, ex-post losses in shareholder value may be offset by ex-ante gains in performance through higher employee motivation.
- Language
-
Englisch
- Bibliographic citation
-
Series: IZA Discussion Papers ; No. 11789
- Classification
-
Wirtschaft
Design of Experiments: Laboratory, Individual
Firm Behavior: Theory
Compensation Packages; Payment Methods
Personnel Economics: Compensation and Compensation Methods and Their Effects
- Subject
-
shareholder value
corporate social responsibility
incentives
motivation
experiment
- Event
-
Geistige Schöpfung
- (who)
-
Kajackaite, Agne
Sliwka, Dirk
- Event
-
Veröffentlichung
- (who)
-
Institute of Labor Economics (IZA)
- (where)
-
Bonn
- (when)
-
2018
- Handle
- Last update
- 10.03.2025, 11:41 AM CET
Data provider
This object is provided by:
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Kajackaite, Agne
- Sliwka, Dirk
- Institute of Labor Economics (IZA)
Time of origin
- 2018
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