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Management Turnover, Strategic Ambiguity and Supply Incentives

Author

Listed:
  • Nicolas Pasquier

    (Universidade do Minho = University of Minho [Braga])

  • Pascal Toquebeuf

    (GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes)

Abstract

When a firm appoints a new manager, it reopens the possibility of new contractual friction with its partners. We explore strategic ambiguity as a potential for friction with a supplier. The firm's new manager probably has fuzzy expectations about the supplier's strategy. An optimistic manager weights favorable strategies more heavily than detrimental ones, whereas a pessimistic manager does the opposite. We show that the manager's degree of optimism is critical: above a threshold, it can cause the supplier to change the timing of its contracting and increase its profits. We also find that this threshold degree of optimism depends on the degree of product substitution: it is more stringent with imperfect substitutes than with perfect substitutes or unrelated goods.

Suggested Citation

  • Nicolas Pasquier & Pascal Toquebeuf, 2023. "Management Turnover, Strategic Ambiguity and Supply Incentives," Post-Print hal-04476883, HAL.
    • Handle: RePEc:hal:journl:hal-04476883
    DOI: 10.1515/bejte-2021-0070
    as

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