Target Setting in Multi-Divisional Organizations

Abstract

ABSTRACT The target-setting literature has primarily focused on motivation issues in relatively simple single-task settings. I argue that performance targets also play an important role in addressing other issues such as multi-tasking, information asymmetry, retention, rent extraction, commitment, and coordination in multi-agent settings. Broadening the scope of the literature can help reconcile the theory and empirical evidence on how organizations set and revise performance targets. Moreover, a broader scope can help motivate emerging work on target-setting choices such as the number of targets for each performance dimension, concavity or convexity of target-based contracts, relative target difficulty for different performance dimensions, and coordination and disclosure of targets in multi-agent settings.

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