Redesigning Teams and Incentives in a Merger: An Experiment with Managers and Students

By Claude Montmarquette, Jean-Louis Rullière, Marie-Claire Villeval, Romain Zeiliger. Management Sciences, 2004

507 citations recorded by the source corpus.

After a merger, company officials face the challenge of making compensation schemes uniform and of redesigning teams with managers from companies with different incentives, work habits, and recruiting methods. In this paper, we investigate the relationship between executive pay and performance after a merger by dissociating the respective influence of shifts, which occur in both compensation incentives and team composition. The results of a real task experiment conducted with managers within a large pharmaceutical company not only show that changes in compensation incentives affect performance, but also suggest that the sorting effect of incentives in the previous companies impact cooperation and efficiency after the merger. Replicating this experiment with students showed differences in strategy rather than in substance between the two groups of subjects with managers appearing performance driven, while students are more cost driven.

Subfields: Safety Research

View Paper: https://www.semanticscholar.org/paper/e879223310d7b43cf868a594de1e05b91b92d645

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Citations in the corpus

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Corporate Culture, Societal Culture, and Institutions (2015, background): “Similarly, Acemoglu et al. (2001), attribute economic success to the type of legal institutions designed by the colonizing power.”
Dismissal Protection and Worker Flows in OECD Countries: Evidence from Cross-Country/Cross-Industry Data (2013, unknown): “…that, under standard assumptions on adjustment costs, dismissal regulations have a greater impact on job and worker flows in industries with greater natural propensity to make staff adjustments on the external labour market, in the absence of adjustment costs (see e.g. Micco and Pages, 2006).”
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