IDEAS home Printed from https://ideas.repec.org/a/bpj/ordojb/v62y2011i1p231-268n11.html
   My bibliography  Save this article

Wie sollte die Managementvergütung (nicht) reguliert werden? – Ordnungspolitische Überlegungen zur Haftungsbeschränkung von und in Organisationen / How Managerial Compensation Should (not) be Regulated - Analyzing Limited Liability of Organizations and Within Organizations

Author

Listed:
  • Pies Ingo
  • Sass Peter

Abstract

Walter Eucken strongly rejected the institution of limited liability. From his point of view, only unrestricted full liability was in conformity with the market order. This perspective misses important insights, as is shown with recourse to the modern microeconomics of risk allocation: Firstly, one can realize welfare gains by providing organizations with the status of limited liability. Second, one can realize further welfare gains within organizations by means of incentive contracts to solve principal-agent problems between equity holders and managers, e.g. by convex payment schemes that provide a kind of limited liability for managers. Both aspects are of vital importance for entrepreneurial innovations and thus for the dynamism of market economies. The main proposition is that limited liability within organizations should not be regulated by intervention, but by a second-order politics of institutional design. The article concludes with comments regarding the relationship between the politics and the ethics of institutional order

Suggested Citation

  • Pies Ingo & Sass Peter, 2011. "Wie sollte die Managementvergütung (nicht) reguliert werden? – Ordnungspolitische Überlegungen zur Haftungsbeschränkung von und in Organisationen / How Managerial Compensation Should (not) be Regulate," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 62(1), pages 231-268, January.
    • Handle: RePEc:bpj:ordojb:v:62:y:2011:i:1:p:231-268:n:11
    DOI: 10.1515/ordo-2011-0111
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/ordo-2011-0111
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/ordo-2011-0111?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Brander, James A. & Lewis, Tracy R., 1986. "Oligopoly and Financial Structure: The Limited Liability Effect," American Economic Review, American Economic Association, vol. 76(5), pages 956-970, December.
    2. Boatright, John R., 2009. "From Hired Hands to Co-Owners: Compensation, Team Production, and the Role of the CEO," Business Ethics Quarterly, Cambridge University Press, vol. 19(4), pages 471-496, October.
    3. Phelps Edmund S., 2009. "Refounding Capitalism," Capitalism and Society, De Gruyter, vol. 4(3), pages 1-12, December.
    4. Czarnitzki Dirk & Kraft Kornelius, 2000. "Haftungsregeln und Innovation / Legal Form and Innovation," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 220(5), pages 513-526, October.
    5. William J. Baumol, 2013. "The Microtheory of Innovative Entrepreneurship," Journal of Economic Sociology, National Research University Higher School of Economics, vol. 14(3), pages 96-108.
    6. Czarnitzki, Dirk & Kraft, Kornelius, 2000. "Haftungsregeln und Innovation," ZEW Discussion Papers 00-38, ZEW - Leibniz Centre for European Economic Research.
    7. repec:bla:jindec:v:46:y:1998:i:4:p:453-88 is not listed on IDEAS
    8. Dietmar Harhoff & Konrad Stahl & Michaerl Woywode, 1998. "Legal Form, Growth and Exit of West German Firms—Empirical Results for Manufacturing, Construction, Trade and Service Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 46(4), pages 453-488, December.
    9. Baumol, William J., 1996. "Entrepreneurship: Productive, unproductive, and destructive," Journal of Business Venturing, Elsevier, vol. 11(1), pages 3-22, January.
    10. Pies, Ingo, 2001. "Eucken und von Hayek im Vergleich," Untersuchungen zur Ordnungstheorie und Ordnungspolitik, Mohr Siebeck, Tübingen;Walter Eucken Institut, Freiburg, Germany, edition 1, volume 43, number urn:isbn:9783161476365, September.
    11. Coles, Jeffrey L. & Daniel, Naveen D. & Naveen, Lalitha, 2006. "Managerial incentives and risk-taking," Journal of Financial Economics, Elsevier, vol. 79(2), pages 431-468, February.
    12. Pies, Ingo & Sass, Peter, 2010. "Verdienen Manager, was sie verdienen? Eine wirtschaftsethische Stellungnahme," Discussion Papers 2010-4, Martin Luther University of Halle-Wittenberg, Chair of Economic Ethics.
    13. Luigi Zingales, 2010. "A Market-Based Regulatory Policy to Avoid Financial Crises," Cato Journal, Cato Journal, Cato Institute, vol. 30(3), pages 535-540, Fall.
    14. Katja Rost & Margit Osterloh, 2009. "Management Fashion Pay-for-Performance for CEOs," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 61(2), pages 119-149, April.
    15. Thanassoulis John, 2009. "Now Is the Right Time to Regulate Bankers' Pay," The Economists' Voice, De Gruyter, vol. 6(5), pages 1-4, April.
    16. Pies, Ingo & Hielscher, Stefan & Beckmann, Markus, 2009. "Moral Commitments and the Societal Role of Business: An Ordonomic Approach to Corporate Citizenship," Business Ethics Quarterly, Cambridge University Press, vol. 19(3), pages 375-401, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pies, Ingo & Sass, Peter, 2011. "Wie sollte die Managementvergütung (nicht) reguliert werden? Ordnungspolitische Überlegungen zur Haftungsbeschränkung von und in Organisationen," Discussion Papers 2011-2, Martin Luther University of Halle-Wittenberg, Chair of Economic Ethics.
    2. Pies, Ingo & Sass, Peter, 2011. "Haftung und Innovation: Ordonomische Überlegungen zur Aktualisierung der ordnungspolitischen Konzeption," Discussion Papers 2011-4, Martin Luther University of Halle-Wittenberg, Chair of Economic Ethics.
    3. Pies, Ingo & Beckmann, Markus & Hielscher, Stefan, 2012. "The political role of the business firm: An ordonomic concept of corporate citizenship developed in comparison with the Aristoleian idea of individual citizenship," Discussion Papers 2012-1, Martin Luther University of Halle-Wittenberg, Chair of Economic Ethics.
    4. Pies, Ingo, 2021. "Kapitalismus als System zur Verwirklichung moralischer Anliegen - Ordonomische Denkanstöße," Discussion Papers 2021-01, Martin Luther University of Halle-Wittenberg, Chair of Economic Ethics.
    5. Pies, Ingo, 2022. "30 Jahre Wirtschaftsethik: Zur Entwicklung des ordonomischen Forschungsprogramms," Discussion Papers 2022-02, Martin Luther University of Halle-Wittenberg, Chair of Economic Ethics.
    6. Marcus Box & Karl Gratzer & Xiang Lin, 2020. "Destructive entrepreneurship in the small business sector: bankruptcy fraud in Sweden, 1830–2010," Small Business Economics, Springer, vol. 54(2), pages 437-457, February.
    7. Elert, Niklas & Henrekson, Magnus, 2017. "Entrepreneurship and Institutions: A Bidirectional Relationship," Working Paper Series 1153, Research Institute of Industrial Economics, revised 05 May 2017.
    8. Francesco Quatraro & Marco Vivarelli, 2015. "Drivers of Entrepreneurship and Post-entry Performance of Newborn Firms in Developing Countries," The World Bank Research Observer, World Bank, vol. 30(2), pages 277-305.
    9. Will, Matthias Georg & Hielscher, Stefan, 2013. "How do companies invest in corporate social responsibility? An ordonomic contribution for empirical CSR research," Discussion Papers 2013-3, Martin Luther University of Halle-Wittenberg, Chair of Economic Ethics.
    10. Pies, Ingo & Hielscher, Stefan & Everding, Sebastian, 2020. "Do hybrids impede sustainability? How semantic reorientations and governance reforms can produce and preserve sustainability in sharing business models," Journal of Business Research, Elsevier, vol. 115(C), pages 174-185.
    11. Jean Bonnet & Nicolas Le Pape & Teresa Nelson, 2011. "Firm start-up strategies and performance in France: Survival and growth," Economics Working Paper Archive (University of Rennes & University of Caen) 201117, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    12. Elert, Niklas & Henrekson, Magnus & Stenkula, Mikael, 2017. "Institutional Reform for Innovation and Entrepreneurship: An Agenda for Europe," Working Paper Series 1150, Research Institute of Industrial Economics, revised 16 Feb 2017.
    13. Brixiová, Zuzana & Ncube, Mthuli & Bicaba, Zorobabel, 2015. "Skills and Youth Entrepreneurship in Africa: Analysis with Evidence from Swaziland," World Development, Elsevier, vol. 67(C), pages 11-26.
    14. Rajeev Goel & Devrim Göktepe-Hultén, 2013. "Nascent entrepreneurship and inventive activity: a somewhat new perspective," The Journal of Technology Transfer, Springer, vol. 38(4), pages 471-485, August.
    15. Mayer-Haug, Katrin & Read, Stuart & Brinckmann, Jan & Dew, Nicholas & Grichnik, Dietmar, 2013. "Entrepreneurial talent and venture performance: A meta-analytic investigation of SMEs," Research Policy, Elsevier, vol. 42(6), pages 1251-1273.
    16. Maloney,William F. & Zambrano,Andrés, 2021. "Learning to Learn : Experimentation, Entrepreneurial Capital, and Development," Policy Research Working Paper Series 9890, The World Bank.
    17. Pies, Ingo & Beckmann, Markus & Hielscher, Stefan, 2009. "Sozialstruktur und Semantik - Ordonomik als Forschungsprogramm in der modernen (Welt-)Gesellschaft," Discussion Papers 2009-6, Martin Luther University of Halle-Wittenberg, Chair of Economic Ethics.
    18. Elert, Niklas & Henrekson, Magnus, 2021. "Innovative Entrepreneurship as a Collaborative Effort: An Institutional Framework," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 17(4), pages 330-435, June.
    19. William F. Maloney & Felipe Valencia Caicedo, 2014. "Engineers, Innovative Capacity and Development in the Americas," Documentos CEDE 11948, Universidad de los Andes, Facultad de Economía, CEDE.
    20. Daniele Moschella & Federico Tamagni & Xiaodan Yu, 2019. "Persistent high-growth firms in China’s manufacturing," Small Business Economics, Springer, vol. 52(3), pages 573-594, March.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:ordojb:v:62:y:2011:i:1:p:231-268:n:11. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.