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DESCRIPTION:Ufuk Akcigit\, University of Pennsylvania&nbsp\;Lack of Selecti
 on and Limits to Delegation: Firm Dynamics in Developing CountriesFirm dyn
 amics\nin poor countries show striking differences to those of rich countr
 ies. While\nsome firms indeed experience growth as they age\, many firms a
 re simply stagnant\nin that they neither exit nor expand. We interpret thi
 s fact as a lack of\nselection\, whereby producers with little growth pote
 ntial survive because\ninnovating firms do not expand enough to force them
  out of the market. To\nexplain these differences we develop a theory\, wh
 ereby contractual frictions\nlimit firms’ acquisition of managerial time. 
 If managerial effort provision is\nnon-contractible\, entrepreneurs will b
 enefit little from delegating decision\npower to outside managers\, as the
 y spend most of their time monitoring their\nmanagerial personnel. As the 
 return to managerial time is higher in big firms\,\nimprovements in the de
 gree of contract enforcement will raise the returns of\ngrowing large and 
 thereby increase the degree of creative destruction. To\ndiscipline the qu
 antitative importance of this mechanism\, we incorporate such\nincomplete 
 managerial contracts into an endogenous growth model and calibrate\nit to 
 firm level data from India. Improvements in the efficacy of managerial\nde
 legation can explain a sizable fraction of the difference between plants’\
 nlife-cycle in the US and India.\n\nUfuk\nAkcigit\nis\nan Assistant Profes
 sor of Economics at the University of Pennsylvania. He is\nalso a Faculty 
 Research Fellow at the National Bureau of Economic Research. He\nreceived 
 his PhD from MIT and has been&nbsp\;at Penn since 2009. His research\ninte
 rests are in macroeconomics\, economic growth\, technological change\,\npr
 oductivity\, firm dynamics\, and economics of innovation. He is one of the
 \nwinners of the 2014 Kauffman Junior Faculty Fellowship. Sponsored by Tra
 de Development and Political Economy Program at the Moynihan Institute of 
 Global Affairs
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DTSTAMP:20260513T110727Z
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SUMMARY:TDPE presents: Ufuk Akcigit
UID:RFCALITEM639142528473636041
X-ALT-DESC;FMTTYPE=text/html:<p></p><p><b>Ufuk Akcigit</b>\, <i>University 
 of Pennsylvania&nbsp\;</i></p><p><b>Lack of Selection and Limits to Delega
 tion: Firm Dynamics in Developing Countries</b></p>Firm dynamics\nin poor 
 countries show striking differences to those of rich countries. While\nsom
 e firms indeed experience growth as they age\, many firms are simply stagn
 ant\nin that they neither exit nor expand. We interpret this fact as a lac
 k of\nselection\, whereby producers with little growth potential survive b
 ecause\ninnovating firms do not expand enough to force them out of the mar
 ket. To\nexplain these differences we develop a theory\, whereby contractu
 al frictions\nlimit firms’ acquisition of managerial time. If managerial e
 ffort provision is\nnon-contractible\, entrepreneurs will benefit little f
 rom delegating decision\npower to outside managers\, as they spend most of
  their time monitoring their\nmanagerial personnel. As the return to manag
 erial time is higher in big firms\,\nimprovements in the degree of contrac
 t enforcement will raise the returns of\ngrowing large and thereby increas
 e the degree of creative destruction. To\ndiscipline the quantitative impo
 rtance of this mechanism\, we incorporate such\nincomplete managerial cont
 racts into an endogenous growth model and calibrate\nit to firm level data
  from India. Improvements in the efficacy of managerial\ndelegation can ex
 plain a sizable fraction of the difference between plants’\nlife-cycle in 
 the US and India.<p>\n\n</p>Ufuk\nAkcigit\nis\nan Assistant Professor of E
 conomics at the University of Pennsylvania. He is\nalso a Faculty Research
  Fellow at the National Bureau of Economic Research. He\nreceived his PhD 
 from MIT and has been&nbsp\;at Penn since 2009. His research\ninterests ar
 e in macroeconomics\, economic growth\, technological change\,\nproductivi
 ty\, firm dynamics\, and economics of innovation. He is one of the\nwinner
 s of the 2014 Kauffman Junior Faculty Fellowship.<p> </p><p><b><i>Sponsore
 d by Trade Development and Political Economy Program at the Moynihan Insti
 tute of Global Affairs</i></b></p><p></p>
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