Wouter Dessein, Columbia: Organizational Capital, Managerial Heterogeneity, and Firm Dynamics.
ESOP seminar. Wouter Dessein is the Eli Ginzberg Professor of Finance and Economics at the Columbia Business School. He will present a paper entitled "Organizational Capital, Managerial Heterogeneity, and Firm Dynamics", co-authored by Andrea Prat.
Wouter Dessein. Photo: Columbia
We develop a simple model of firm dynamics, where firm performance depends on a set of intangible assets that we call organizational capital. In turn, the growth of organizational capital depends on the ability and behavior of the CEO. The profit-maximizing firm owner can hire and fi re the CEO but she faces informational and contractual constraints. Equilibrium is characterized by the co-existence of firms with different organizational capital, different leadership styles, and different performances. This model rationalizes stylized facts about fi rm performance, management practices, and CEOs.
Host: Bård Harstad