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Author: | Bol, J.C. Moers, F. |
Title: | The dynamics of incentive contracting: the role of learning in the diffusion process |
Journal: | Accounting, Organizations and Society
2010 : NOV, VOL. 35:8, p. 721-736 |
Index terms: | Europe banks incentives agency theory learning diffusion |
Language: | eng |
Abstract: | This paper empirically examines the initial adoption and subsequent diffusion process of a performance-based incentive system of a large European cooperative bank. Based on both qualitative and quantitative field data, agency theory variables are found to explain early adoption. When examining a longer horizon, it is found that although not adopting immediately, within 3 years almost all local banks had done so. This process is analyzed. It is found that extensive learning-by-doing and strong subsequent learning spillovers led to this relatively rapid diffusion. In addition, it is also found that the probability with which an initial non-adopter adopts the new incentive system in the next period depends on the strength of the local bank's social network. |
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