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Author Liberti, Jose Maria
Source CiteSeerX
Content type Text
File Format PDF
Subject Domain (in DDC) Computer science, information & general works ♦ Data processing & computer science
Abstract This paper empirically examines how changes in the hierarchical structure of a large organization can affect incentives. The empirical analysis exploits a change in the hierarchical structure of the Corporate Division of a private foreign commercial bank in Argentina between 1999 and 2001. Using detailed hand collected data on credit approvals, as well as perceived effort measures for each relationship manager from quality surveys done to borrowing firms, I test whether delegation of authority and reduction of oversight improves or decreases the provision of effort by account managers. Results suggest that “empowering managers ” increases the time relationship managers spend with their corporate clients, increases perceived effort and reduces the number of complaints the bank receives from its clients. Alternative explanations and several tests are constructed to examine the different channels through which effort measures could have increased other than the change in organizational structure. I then test whether the improvement is really because managers make better use of their decision making authority rather than they simply wastelesstimeinfiling reports to their superiors. I find that individuals who receive more authority use their soft information more compared to individuals to whom authority is only partially delegated. This suggests that delegation of authority increases managerial effort not only because management spends
Educational Role Student ♦ Teacher
Age Range above 22 year
Educational Use Research
Education Level UG and PG ♦ Career/Technical Study
Learning Resource Type Article
Publisher Date 2006-01-01