scholarly journals Risky Income or Lumpy Investments? Evidence on Two Theories of Underspecialization

2018 ◽  
Vol 66 (4) ◽  
pp. 629-671 ◽  
Author(s):  
Ajay Shenoy
Keyword(s):  
Lumpy Investments

scholarly journals Optimal regulation of lumpy investments

2013 ◽  
Vol 44 (2) ◽  
pp. 177-196 ◽  
Author(s):  
Peter Broer ◽  
Gijsbert Zwart
Keyword(s):  
Optimal Regulation ◽  
Lumpy Investments

scholarly journals Forward-looking distribution network charges considering lumpy investments

2021 ◽  
Author(s):  
Niels Govaerts ◽  
Kenneth Bruninx ◽  
Hélène ◽  
Leonardo Meeus ◽  
Erik Delarue
Keyword(s):  
Distribution Network ◽  
Lumpy Investments ◽  
Forward Looking

scholarly journals Correction to: Forward-looking distribution network charges considering lumpy investments

2021 ◽  
Author(s):  
Niels Govaerts ◽  
Kenneth Bruninx ◽  
Hélène Le Cadre ◽  
Leonardo Meeus ◽  
Erik Delarue
Keyword(s):  
Distribution Network ◽  
Lumpy Investments ◽  
Forward Looking

Responsibility Centers, Decision Rights, and Synergies

2019 ◽  
Vol 95 (2) ◽  
pp. 1-29 ◽  
Author(s):  
Tim Baldenius ◽  
Beatrice Michaeli
Keyword(s):  
Optimal Allocation ◽  
Incentive Contracts ◽  
The Other ◽  
Risk Averse ◽  
Business Unit ◽  
Decision Rights ◽  
Specific Investments ◽  
Lumpy Investments ◽  
Allocation Of Decision Rights ◽  
Jel Classifications

ABSTRACT We consider the optimal allocation of decision rights over noncontractible specific investments. Risk-averse business unit managers each engage in general (stand-alone) operations and invest in joint projects that benefit their own and other divisions. Which of the managers should have the authority to choose these investments? With scalable investments, we show that decision rights should be bundled in the hands of the manager facing the more volatile environment. With discrete (lumpy) investments, on the other hand, decision rights should be split between the managers, provided they face comparable levels of uncertainty in their general operations. Splitting decision rights better leverages the inherent investment complementarity, counter to conventional wisdom. Our model generates empirical predictions for the equilibrium association of organizational structure and managers' incentive contracts: bundling of decision rights results in pay-performance sensitivity (PPS) divergence across divisions; splitting them results in PPS convergence. JEL Classifications: M41; D23; D86.

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