Why Do Socially Concerned Firms Provide Low-Powered Incentives to Their Managers?

摘要: We introduce a mixed quantity-setting duopoly with socially concerned firm and profit-maximizing to derive firms' optimal combination of the organization's type, structure managerial compensation its manager's type. Both firms delegate quantity choice managers who can be either selfish -- solely interested in monetary or intrinsically motivated partially goal firm. Although we show that both prefer hire an manager save on costs, only for it has strategic value. The contract depends always prefers use incentives based profit sales revenue. In contrast, is preferable fixed wage compensate if level social concern sufficiently high. further discuss endogenous strategy demonstrate setting investors might benefit they commit consider welfare consumers rely intrinsic motivation firm's manager. short, our paper studies three different commitment devices provides justification recent increase responsibility as competitive widespread low-powered firms.