Anand B., Galetovic A., Stein A. (2004).

Incentives versus synergies in markets for talent. SSRN Working Papers, No. 513042.



We study what type of organization will host projects where talented individuals are pivotal. A cash-constrained and talented individual must invest in acquiring a skill essential to execute a project. Skill acquisition may be financed by either a corporation, which inserts the project into its pre-existing organization; or a specialist that finances single-project firms. The specialist can make talent the residual claimant. The corporation can exploit cross-project synergies by centralizing operations, which weakens incentives. Property rights may be weak: talent may leave and develop the project elsewhere after acquiring the skill.