Can Entrenched Lame Ducks Be Optimal? An Economic Model of Leadership and Organizational Change

30 Pages Posted: 23 Apr 2007

See all articles by James Dow

James Dow

London Business School - Institute of Finance and Accounting

Clara C. Raposo

ISEG Lisbon School of Economics & Management

Date Written: February 2007

Abstract

Assume leaders cannot coerce followers: effective leaders can make changes because other people want to follow them, while ineffective leaders are unable to make changes because others will tacitly resist. Assume followers and leaders share the same objectives for successful change, but leaders have a limited tenure while followers are long lived. This time pressure for the leader can lead to outcomes in which lame ducks are unable to attract support towards the end of their tenure. We show that entrenchment, as opposed to early removal of lame ducks, can be optimal because it improves incentives ex ante. We also consider heterogeneity in the underlying talent of leaders. If good leaders are those with a higher chance of forming a plan, there is a trade-off involving the benefits of sacking inactive leaders, but in our specification it remains true that entrenchment is optimal.

Keywords: Leadership, Entrenchment, Governance, Change

JEL Classification: D70, G30, M50

Suggested Citation

Dow, James and Raposo, Clara C., Can Entrenched Lame Ducks Be Optimal? An Economic Model of Leadership and Organizational Change (February 2007). Available at SSRN: https://ssrn.com/abstract=981365 or http://dx.doi.org/10.2139/ssrn.981365

James Dow (Contact Author)

London Business School - Institute of Finance and Accounting ( email )

Sussex Place
Regent's Park
London NW1 4SA
United Kingdom
+44 20 7262 5050 (Phone)
+44 20 7724 3317 (Fax)

Clara C. Raposo

ISEG Lisbon School of Economics & Management ( email )

Rua do Quelhas 6
LISBOA, 1200-781
Portugal

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