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| Author: | Gal-Or, E. Amit, R. |
| Title: | Does empowerment lead to higher quality and profitability ? |
| Journal: | Journal of Economic Behavior and Organization
1998 : SEP, VOL. 36:4, p. 411-431 |
| Index terms: | COMPANIES PROFITABILITY PRODUCTS QUALITY UNCERTAINTY MODELS |
| Language: | eng |
| Abstract: | In the paper, the implications of alternative empowerment regimes on a firm's product quality and profitability are examined in the case when ownership and management of the firm are separated and it faces environmental uncertainties. The analyses of a three-stage game highlight the circumstances under which empowering a manager to make quality investment decisions results in higher profitability and / or product quality. When delegation reduces a manager's disutility, either monitored or complete empowerment arise as the preferred management system. If delegation increases the manager's disutility of effort, and uncertainties about consumers' preferences are small, forcing may become the preferred management system. |
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