nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2010‒09‒18
four papers chosen by
Arvi Kuura
Parnu College - Tartu University

  1. The Importance of Being Consulted By A. Fedele; A. Mantovani
  2. Information, Authority, and Corporate Hierarchies By Chongwoo Choe; In-Uck Park
  3. Human Nature, the Environment, and Behaviour: Explaining the scope and geographical scale of financial decision-making.. By Clark, Gordon L.
  4. Organizational Synergy, Dissonance and Spinoffs By Mili Shrivastava; T.V.S.Ramamohan Rao

  1. By: A. Fedele; A. Mantovani
    Abstract: Does management consulting facilitate the access to credit for start-ups? This paper tries to answer the question by developing a theoretical framework where a firm applies for a bank loan to implement a risky project. The probability of success increases if the firm exerts a costly managerial extra-effort, but the bank is unable to observe such an effort: a moral hazard problem may therefore occur. During an economic downturn the project’s expected profitability is likely to be low relatively to the effort cost. In this case we find that credit is granted only if the bank hires a management consultant, even when the latter does not improve the business practice.
    JEL: M11 M13 D82
    Date: 2010–08
  2. By: Chongwoo Choe; In-Uck Park
    Abstract: In a typical corporate hierarchy, the manager is delegated the authority to make strategic decisions, and to contract with other employees. By studying a model with one principal and two agents where one agent can gather information that is valuable for the principal's project choice and the other agent provides effort to the chosen project, we study when the principal can benefit from such delegation relative to centralization. We show that beneficial delegation is possible when complete contracts cannot be written, and delegation of authority should necessarily be to the information gatherer. The benefits of delegation stem from either efficiency gains or reduction in rent to the information gatherer.
    Keywords: Corporate hierarchies, information gathering, delegation, centralization
    JEL: C72 D21 D82 L22
    Date: 2010–05
  3. By: Clark, Gordon L.
    Abstract: This paper explores two inter-related themes. One addresses fundamental questions of human nature, arguing that conventional theories of behaviour lack a credible appreciation of the interaction between cognition and context (or what is often termed as the 'environment'). The second considers decision-making under risk and uncertainty, focusing upon customary behaviour and the significance or otherwise of conscious deliberation. My argument is intended to be both critical and constructive, exploring the claims of the emerging school of behaviouralism associated with Kahneman and Tversky now sweeping the social sciences. Most importantly, it is argued that economic geography should take more seriously the nature and scope of behaviour recognising its attributes including related social and cultural aspirations. These ideas are illustrated by a set of recent studies dealing with financial decision-making and individuals' attitudes towards risk in personal and occupational pension plans. The importance of this project lies in the urgent need to understand the diversity of behaviour of men and women in, and through, the communities in which they live without being reduced to yet another version of environmental determinism. In conclusion, implications are drawn for understanding the global financial crisis.
    JEL: D81 J12 G11 D14
    Date: 2010
  4. By: Mili Shrivastava (Entrepreneurship, Growth and Public Policy Group, Max Planck Institute of Economics, Jena); T.V.S.Ramamohan Rao (Indian Institute of Technology, Kanpur)
    Abstract: Spinoff firms are exceptional performers across industries. The causes for the emergence of spinoff firms are widely investigated in the literature. However, the role of teams for spinoffs has received little scholarly attention. On one hand, talented individuals may find it necessary to team up with others to utilize complementary knowledge and generate synergies. On the other hand, some types of team production environments may have dissonance and motivate individuals to leave the team. The present study demonstrates that organizational synergies and dissonance can be incorporated into appropriate specifications of team production functions. This framework explains the necessity to form a team, stability of teams, and the emergence of different types of spinoffs depending on specific organizational arrangements.
    Keywords: Organizational synergy, Production functions, Spinoffs
    JEL: D23 D85 D02
    Date: 2010–09–08

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