Economic Theory Seminar: Suraj Prasad (University of Sydney)
Managing Innovation (and Conflict) through Mediation
Presenter: Suraj Prasad | University of Sydney
We consider an organization where innovations are developed in parallel. When innovators have preferences over features of the innovations and when scarce resources limit the number of innovations that can be implemented, conflict arises in the organization. Allowing a manager – who has moderate preferences – to control resource allocation can be beneficial. In particular, the manager acts as a mediator – innovators moderate the features of their innovation to appeal to the manager. This provides insurance to the innovators, and as a consequence, they work harder. The cost of mediation by the manager is the loss of control for innovators.
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