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leads foreign entrepreneurs to place little reliance on formal contracts in their dealings with local agent managers … industry growth creates a substantial ‘shadow of the future,’ where managers’ outside employment options are relatively limited …
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relationships, in particular trust, allow managers to arrange a business in a more productive way; high-trust firms are both more … profitable and faster growing. For example, if they are trusted, managers can delegate decisions to employees with confidence …
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This paper analyzes delegation and joint decision making in an environment with private information and partially aligned preferences. We compare the benefits of these two decision making procedures as well as the interaction between them. We give a condition under which delegation is preferred...
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