Making Partner: How it Influences Business Risk Strategy and Execution Effort
Loss, Frédéric; Renucci, Antoine (2019), Making Partner: How it Influences Business Risk Strategy and Execution Effort, The Scandinavian Journal of Economics. 10.1111/sjoe.12390
TypeArticle accepté pour publication ou publié
Journal nameThe Scandinavian Journal of Economics
MetadataShow full item record
Laboratoire d'Economie de Dauphine [LEDa]
Abstract (EN)Associates need reputation and financial resources to make partner at law firms, consultancies, or venture capital organizations. We provide a theory for how this prospect influences the business risk strategy they pursue and their execution effort. In our model, business risk affects how reputation evolves and the benchmark reputation for making partner through the impact of execution effort on the financial resources accumulated. We show that (i) when business risk is observable, high‐reputation associates take high business risk, rather than low business risk, to protect their reputation, (ii) opening partner positions decreases effort incentives of the best‐reputation associates, and we conjecture that (iii) wage dispersion at associate level should be higher when business risk is unobservable.
Subjects / KeywordsCareer concerns; partnerships; reputation risk; business risk; D83; G30; L14; L26
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