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

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

 

Abstract:

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.