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Alleviating Managerial Dilemmas In Human-Capital-Intensive Firms Through Incentives: Evidence From M&A Legal Advisors
Strategic Management Journal (2016)
  • Olivier Chatain, HEC Paris
  • Philipp Meyer-Doyle
Abstract
We examine how human-capital-intensive firms deploy their human assets and how firm-specific human capital interacts with incentives to influence this deployment. Our empirical context is the UK M&A legal market, where micro-data enable us to observe the allocation of lawyers to M&A mandates under different incentive regimes. We find that law firms actively equalize the workload among their lawyers to seek efficiency gains while ‘stretching’ lawyers with high firm-specific capital to a greater extent. However, lawyers with high firm-specific capital also appear to influence the staffing process in their favor, leading to unbalanced allocations and less sharing of projects and clients. Paradoxically, law firms may adopt a seniority-based rent-sharing system that weakens individual incentives to mitigate the impact of incentive conflicts on resource deployment.
Keywords
  • Human-Capital-Intensive Firms; Human Capital; Managerial Dilemmas; Incentives; Capabilities; Micro-foundations; Mergers and Acquisitions; Law firms
Publication Date
2016
Citation Information
Olivier Chatain and Philipp Meyer-Doyle. "Alleviating Managerial Dilemmas In Human-Capital-Intensive Firms Through Incentives: Evidence From M&A Legal Advisors" Strategic Management Journal (2016)
Available at: http://works.bepress.com/olivier_chatain/12/