Incentive Complementarity: Investment-bonding, Profit-sharing and the Performance of Firms in Rural China
Complementarity between incentive instruments is regarded as one of the central themes of theoretical research in the economics of industrial organization in recent years. However, despite its importance, empirical evidence on the existence of complementarities is limited. In this paper we identify complementarities between incentive mechanisms used by firm-owners to motivate managers. Using a multi-task principal-agent framework we consider a problem in which the owner uses two incentive instruments, profit-sharing and investment-bonding, to motivate the manager in two tasks, production and asset-maintenance. Our theoretical model yields testable hypothesis regarding the complementary and individual effects of incentives on performance. We test the hypothesis of our theoretical model against a dataset on 56 rural firms in China, observed in 1988 and 1995. Our descriptive results clearly show that the two instruments are complements. Our econometric model using a panel regression framework confirms that significant complementaries exist in terms of the impact of the two instruments on performance. In order to evaluate the robustness of our results we account for unobserved differences in firm quality using fixed effects and instrumental variables regressions. Support for the complementarity hypothesis is also found after controlling for unobserved heterogeneity.
The German Presidency in the EU
Ambassador Scharioth, who joined the Foreign Service in 1976, previously served as state secretary of the Federal Foreign Office (2002-2006), political director and head of the Political Directorate-General (1999-2002), head of the International Security and North America Directorate (1998-1999), head of the Office of the Foreign Minister (1998), head of the Defense and Security Policy Division at the Federal Foreign Office (1996-1997), and chef de cabinet to the NATO secretary-general in Brussels (1993-1996). In addition, he worked in the International Law Division of the Federal Foreign Office (1990-1993), the German Permanent Mission to the United Nations in New York (1986-1990), the Policy Planning Staff of the Federal Foreign Office (1982-1986), the German Embassy in Ecuador (1979-1982), and the Asia Division, Press Division and State Secretary's Office at the Federal Foreign Office (1977-1979).
Ambassador Scharioth holds a master's of arts degree, a law degree and a doctorate from the Fletcher School of Diplomacy.
Arrillaga Alumni Center
Lane/Lyons Conference Room
Stanford University
326 Galvez Street
Palo Alto, CA 94305
The Impact of Globalization on Hewlett-Packard's PC Business
The PC business is one of the most aggressive in the world, with operating efficiency a critical factor for success. At the time of the HP/Compaq merger in 2000, both PC businesses were losing money. Now, seven years later, HP has reported a record first quarter for PCs, generating $8.7B in revenue, a 17% year over year growth and delivering 4.7% in operating profit, representing 0.8pt improvement year over year. So, what operating model has HP used to accomplish this turnaround and be ranked #1 in the world today? How are resource deployment decisions made? What are the key supply chain considerations? How does the company manage P&L and balance sheet tensions? How will HP continue to stay ahead?
As Vice President and General Manager for HP's Consumer Desktop PC Business Unit, Richard Walker is responsible for a global business that provides desktop PCs and digital entertainment centers to consumer markets. Immediately prior to his current assignment, Richard was Vice President of Emerging Markets, responsible for developing long term strategic growth plans for HP's targeted list of emerging countries, with an initial focus on Brazil, Russia, India and China (BRIC). Richard received his bachelor's degree in business from Sheffield Hallam University, Sheffield, England. He also serves on the advisory boards for R&D Logic, a San Mateo based life sciences company; Pacific Peninsula Group, a Menlo Park property development company, and SPRIE at Stanford University.
Philippines Conference Room
Indonesia's Iran Problem: The Double-Edged Impact of Democratization on Foreign Policy
How has Iran become the most serious foreign policy issue in Indonesian politics? Since democracy was restored to Indonesia in 1999, governments there have had to balance public demands for a strong, independent foreign policy against the reality that the economic and political crises of the past decade have limited Jakarta's influence in global politics. Earlier in this period, presidents and foreign ministers faced little more than sporadic challenges over issues that stood little chance of affecting Indonesian foreign policy beyond Southeast Asia. More recently, however, Iran has actively courted Indonesian legislative and civil society leaders, and they, in turn, have pressed their government to oppose international efforts to curb Tehran's nuclear programs. They sharply criticized the Yudhoyono government for failing to oppose a motion in the International Atomic Energy Agency to refer Iran to the UN Security Council in 2006. This year they triggered a heated debate by opposing the government's decision to join a unanimous Security Council vote that broadened sanctions on Iran. Prof. Malley will examine these trends and assess their implications for Indonesian foreign policy and international security.
Michael Malley teaches comparative and Southeast Asian politics at the Naval Postgraduate School in Monterey. Before joining the School in 2004, he taught at Ohio University. He earned a PhD in political science at the University of Wisconsin-Madison, an MA in Asian Studies at Cornell University, and a BS at Georgetown University's School of Foreign Service.
This is the Southeast Asia Forum's fifth seminar of the 2006-2007 academic year.
Daniel and Nancy Okimoto Conference Room