Capital budgeting frequently involves multiple stages at which firms can continue or abandon ongoing projects. In this paper, we study a project requiring two stages of investment. Failure to fund Stage 1 of the investment precludes investment in Stage 2, whereas failure to fund Stage 2 results...

We consider a supply chain with one manufacturer who assembles an end-product consisting of two components (A and B), where each component is purchased from multiple outside suppliers. The manufacturer's decision as to the contract to offer each supplier is complicated by two factors: (1) each...

We consider a supply chain with one manufacturer who assembles an end-product using multiple outsourced parts. The end-product exhibits the “weakest-link” property, such that if any of its component parts fails, the end-product fails. The supplier of each component part can improve the...

Markets have a remarkable capacity for producing efficient resource allocations when information about relative values is dispersed across economic agents. We explore the use of market mechanisms inside the firm to address a resource allocation problem, and compare the outcome with the first-...

[enter Abstract Body]Previous research in management accounting and economics has noted the potential for complementarities between the firm’s performance measurement system and its other organizational design choices. We add to this literature by studying how the informativeness and incentive...

This paper investigates how non-financial performance measures (NPMs) can be used to encourage cooperation across divisions. The implementation of a project often requires joint efforts by multiple divisions. However, privately informed division managers sometimes find it in their self-interest...