Course 2020-2021 a.y.

20620 - ECONOMICS OF BUSINESS STRATEGY - MODULE II (TRANSACTIONS AND INCENTIVES)

Department of Management and Technology

Course taught in English
Go to class group/s: 22
EMIT (8 credits - II sem. - OB  |  5 credits SECS-P/06  |  3 credits SECS-P/08)
Course Director:
CLAUDIO PANICO

Classes: 22 (II sem.)
Instructors:
Class 22: CLAUDIO PANICO


Suggested background knowledge

Good knowledge of basic microeconomics and basic game theory as developed in Bachelor courses is a pre-requisite for this course. Yet, because students have different backgrounds and preparation levels, the course aims to be self-contained. The lectures provide additional technical background to successfully attend this course.

Mission & Content Summary

MISSION

Innovation is a key component of success for large incumbent firms as well as for new entrants. A large part of the innovation process involves transacting with other firms (collaborating and forming alliances to expand resource bases, knowledge bases, and capabilities across organizational boundaries) and incentivizing knowledgeable individuals within the firm. The aim of this course is to provide students with analytical frameworks to assess innovation-based strategies within and between firms, in both entrepreneurial and established firms. The course focuses on the development and application of conceptual and formal models rooted in the main theoretical developments in the fields of management, strategy, and organizational economics.

CONTENT SUMMARY

The course consists of traditional lectures, exercise sessions, in-class experiments, in-class group assignments, and case study discussions, allowing students to understand the managerial implications of the theory and to develop the necessary analytical skills to assess the advantages and challenges of organizing the internal and external sources of innovation. The topics of the course are ideally divided into two parts.

  1. The first part looks at the innovation process from a bargaining, contracting, and incentive perspective, using the lens of transaction costs economics and incomplete contracts to analyze interfirm relationships (e.g., collaborations, strategic alliances, open innovation).
  2. The second part focuses on intrafirm relationships based on coordination and competition, and analyzes the strategic management of human capital.

Part I – Interfirm relationships:

  • Negotiation and bargaining models.
  • Incomplete contracts.
  • Managing (open) innovation.
  • Co-opetition in strategic alliances.
  • Cooperation with repeated alliances.

Part II – Intrafirm relationships:

  • Intro to theory of incentives.
  • Coordination and competition within hierarchies.
  • Managing under asymmetry of information.
  • Delegation of autonomy and incentives.

Strategic management of human capital.


Intended Learning Outcomes (ILO)

KNOWLEDGE AND UNDERSTANDING

At the end of the course student will be able to...
  • Assess the challenges faced by entrepreneurial and established firms when collaborating with external partners.
  • Understand partners’ strategic behavior in short-lived and in repeated alliances.
  • Understand the managerial implications of organizing external sources of innovation.
  • Asses the challenges of organizational control and the provision of incentives.
  • Understand the strategic management of human capital.

APPLYING KNOWLEDGE AND UNDERSTANDING

At the end of the course student will be able to...
  • Conceptualize the main economic frictions of an innovation process.
  • Think about strategizing efforts when collaborating with external partners.
  • Think about the provision of incentives in human-capital intensive firms.
  • Formulate a value creation and capture proposition when organizing for innovation.

Teaching methods

  • Face-to-face lectures
  • Online lectures
  • Exercises (exercises, database, software etc.)
  • Case studies /Incidents (traditional, online)
  • Group assignments
  • Interactive class activities (role playing, business game, simulation, online forum, instant polls)

DETAILS

  • The course consists of traditional lectures with the support of slides. 
  • Exercise sessions aimed to teach students how to set up, solve and interpret the solution to a model.
  • In-class individual experiments where students face scenarios that mimick the problems studied formally in class.
  • In-class assignments whereby the groups of students are asked to conceptualize specific economic problems.
  • Case study discussions whereby the groups of students are required to write a short report, allowing students to understand the managerial implications of the conceptual and formal models developed during the course.

These in-class activities complement the traditional lectures and aim to develop the necessary analytical skills to assess the advantages and challenges of organizing the internal and external sources of innovation.


Assessment methods

  Continuous assessment Partial exams General exam
  • Written individual exam (traditional/online)
    x
  • Group assignment (report, exercise, presentation, project work etc.)
x    
  • Active class participation (virtual, attendance)
x    

ATTENDING STUDENTS

To be considered attending, students must participate in group assignments as described below.

  • In order to measure the acquisition of the learning outcomes, the students’ assessment is based on two main components:
    • Individual experiments and group assignments for both exercise sessions and business cases aimed to test the students’ ability to think critically when applying the conceptual and formal models illustrated during the course.
    • Final written exam aimed to assess students’ ability to apply the analytical tools illustrated during the course, to solve and interpret models of contracting, bargaining, and the provision of incentives.
  • Attending students will participate to the (online and in-class) individual experiments and group assignments for both exercise sessions and business cases that will count for 60% toward the final grade, whereas the final exam will count for 40% toward the final grade.

NOT ATTENDING STUDENTS

Students’ assessment is based on a final written exam at the end of the course that is mainly aimed at

verifying learning of the conceptual and formal models learned when studying the course material (slides, articles, and books) made available on Bboard.


Teaching materials


ATTENDING STUDENTS

A suggested (non mandatory) list of readings for each one of the topics covered in class is provided. The readings consist of a mixture of book chapters, journal articles, and business cases. The readings are posted in Bboard (or in the course reserve of the Bocconi Library). Slides of the lectures, problem sets, and their solutions are also posted.


NOT ATTENDING STUDENTS

A list of readings is made availabe on Bboard together with slides of the lectures, problem sets, and their solutions.

Last change 30/11/2020 11:43