We document that ownership by officers and directors of publicly-traded firms is on average higher today than earlier in the century. Managerial ownership rises from 13 percent for the universe of exchange-listed corporations in 1935, the earliest year for which such data exist, to 21 percent in 1995. We examine in detail the robustness of the increase and explore hypotheses to explain it. Higher managerial ownership has not substituted for alternative corporate governance mechanisms. Lower volatility and greater hedging opportunities associated with the development of financial markets appear to be important factors explaining the

Starting from the theoretical argument underlying the "hump shape" hypothesis, the paper investigates the various dimensions of centralisation in the wage formation process. The diversity of effects discussed in the paper makes it hard to arrive at unambiguous policy conclusions. Careful analysis of the various features and economy-wide direct as well as indirect effects of the degree of centralisation in the wage formation process suggests that there exist various trade-offs, the most important of which appears to be that between real wage restraint and relative wage flexibility: centralisation favours the former but reduces the latter. This suggests that its effect on macroeconomic performance depends on the type of shocks affecting the economy. Cette étude analyse les divers aspects de la centralisation dans le processus de formation des salaires en s’appuyant sur l’hypothèse théorique de "courbe en U inversée". La diversité des effets analysés rend ambigu les conclusions politiques qui peuvent être tirées de ce papier. Une étude minutieuse des divers aspects de la centralisation et de leurs effets tant directs qu’indirects, sur le processus de formation des salaires suggère qu’il existe différent choix d’objectifs, le plus important semble être entre la contrainte de salaire réel et la flexibilité du salaire relatif: la centralisation favorise le premier et affaiblit le second. Ceci suggère que l’impact sur la performance macro-économique dépend du type de choc affectant l’économie.

Economists have written extensively on this question, often focusing on various types of incentive pay contracts aimed at eliciting greater effort from employees. This theoretical research identifies features of employment relationships that limit the effectiveness of simple piece-rate incentive pay plans and that force managers to consider other forms of incentive pay. In addition, managers introduce other human resource management practices, concerning employee training, hiring criteria, teamwork, job design, and employee hierarchies, that are aimed at eliciting optimal performance (see reviews in Gibbons, 1998; Gibbons and Waldman, 1999; Lazear, 1999; Murphy, 1999; and Prendergast, 1999). Still, without empirical evidence on businesses ’ human resource practices, it will remain an open question whether the theories proposed in “personnel economics [are] real or merely a series of clever models proposed by abstract thinkers who have little contact with reality ” (Lazear, 1999). In this study, we describe a new research approach – an approach we label “insider econometrics ” – that is aimed at producing empirical estimates of the value of alternative human resource management practices. This “insider ” approach goes deep

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Infusing hierarchies with elements of market control has become a much-used way of simultaneously increasing entrepreneurialism and motivation in firms. However, this paper argues that such “internal hybrids, ” particularly in their radical forms, are inherently hard to successfully design and implement because of a fundamental incentive problem of establishing credible managerial commitments to not intervene in delegated decision making. This theme is developed and illustrated, using the case of the world-leading hearing aids producer, Oticon. In the beginning of the 1990s, Oticon became famous for its radical internal hybrid, the “spaghetti organization. ” Recent work has interpreted the spaghetti organization as a radical attempt to foster dynamic capabilities by organizational means, neglecting, however, that about a decade later the spaghetti organization has given way to a more traditional matrix organization. In contrast, an organizational economics interpretation of Oticon organizational changes is developed. This lens suggests that a strong liability of the spaghetti organization was the above incentive problem: Frequent managerial meddling with delegated rights led to a severe loss of motivation, and arguably caused the change to a more structured organization. Refutable implications are developed, and the discussion is broadened to more general issues of economic organization.

Major technological, regulatory, and institutional changes have made finance more widely available in recent years. The ability of financial institutions to price a variety of exotic instruments, and to assess and spread risks, has increased. More data on potential borrowers is now available, and it is also more timely. Improvements in accounting disclosure have resulted in greater borrower transparency. Deregulation has resulted in greater competition and better prices in financial markets. Finally, regulatory barriers protecting the turf of different kinds of financial institutions have come down, resulting in the emergence of new institutional forms. These changes amount to a bone fide “financial revolution”. In this article, we focus on the impact the financial revolution has had on the way firms are (or should be) organized and managed, and on the policy consequences. To do this, we first need to understand what firms are and what drives their organizational structure. A caveat is in order at the outset. Finance is not the only force transforming the nature of firms in the last two decades-- deregulation and technological change have also played a big role. These have been explored elsewhere (see, for example, Raghuram Rajan and Luigi Zingales (2000)), hence our focus.

The capitalist and socialist societies of the 20 th century assigned firms different roles within their economic systems. Enterprises transforming from socialist to market economies thus face fundamental organizational restructuring. Many former state-owned firms in the transition economies of Central and Eastern Europe have failed at this task. These firms have pursued primarily defensive downsizing, rather than strategic restructuring, as a result of both internal and external constraints on restructuring strategies. Building on the organizational learning and resource-based theories, we analyze strategies available to management in privatized, former state-owned enterprises in transition economies to restructure their organization. Both internal forces promoting or inhibiting the restructuring process, and external constraints arising in the transition context are examined. A model and testable propositions are developed that explain post-privatization performance. Implications of our research point to the ways in which firms should manage and develop their resource base to transform to competitive enterprises.

Research supported in part by NSF grants DMS—9208758 and SBR—9529926 to the National

Internet applications such as the World Wide Web (WWW) have created the possibility of developing global collaborative platforms for supporting interactions between professionals and academics in various disciplines. While Web browsers such as Mosaic and Netscape have revolutionized the way we use The Internet, we envision the need for a theory-based approach to the development of Collaboratories on the Internet. Based on complementarity theory, we provide a conceptual foundation for designing Collaboratories which maximize users' value through the judicious choice of complementary design factors. We emphasize the need for developments in the area of "open" collaborative systems, and suggest that analyzing the design problem from a complementarity theoretic standpoint can lead to useful insights regarding the value users derive from the system. We also describe the design and an early implementation of an MIS Collaboratory, which uses this theoretical foundation to organize information...

assistance, and we would also like to thank Zvi Griliches and Ken Sokoloff for many helpful comments. The views expressed herein are those of the authors and not necessarily those of the National Bureau of