The pursuit of global opportunities : the role of central managers

Abstract

I study a local manager's incentives to invest in the research of new opportunities, when the implementation of some projects requires the participation of more than one unit. A central manager can select projects or delegate that decision. Delegation matters even when local managers select the same project mix, because the sharing rule changes from accounting to bargaining based. Predictions depend, for example, on the structure of the research tasks, how different local opportunities the managers are expected to have, whether or not global projects require cooperation in the implementation phase, and the level of competition between managers. It is argued that central authority is important to understand the boundaries of firms. The discussion is illustrated with examples from three case studies.