Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 0424: Subordinates as Threats to Leaders

Amihai Glazer and Björn Segendorff
Additional contact information
Amihai Glazer: Department of Economics, University of California, Irvine
Björn Segendorff: Dept. of Economics, Stockholm School of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, S-113 83 Stockholm, Sweden

Abstract: A leader of an organization may view a subordinate as threatening or weakening the leader's position. The threat may increase with the subordinate's ability and reduce the rents the leader wins. In particular, a leader who trains his subordinate reduces the cost to the owner of a firm in replacing the leader, and so reduces the leader's bargaining power. The leader therefore provides inefficiently low training for the subordinate.

Keywords: Leader; Subordinate; Threat; Training; Bargaining

JEL-codes: C72; D72; D82; J33

13 pages, January 21, 2001

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