Ratcheting Effect and the Role of Relative Target S etting

摘要: Managers use a variety of information sources to set performance targets. This paper examines two them: past that is associated with the ratcheting effect and comparable responsibility centers relative target setting (RTS). Using data from 432 branches 2002 2006 large travel retailer, we find evidence consistent relevance both phenomena. In particular, hypothesize weight on targets these varies their content. Consistent this argument centers’ degree setting, lifecycle stage center, magnitude previous year’s variance performance. Moreover asymmetry often fades as RTS included.