The Lazy Manager Theory

3 December 2009 at 8:37 am 7 comments

| Peter Klein |

Good ideas from John Wilkins, who earned a PhD in (I think) evolutionary biology while working as a full-time manager (via Randy). Sample elements of the Lazy Manager Theory:

  • Never do any piece of paperwork when the person who asked for it isn’t there and holding it when they make the request. If they don’t care enough to come see you, they probably don’t need it done. Also, you put faces to names and develop a good personal relationship with those who come to see you, so it’s win-win.
  • If any piece of paper falls off your desk for any reason, throw it away. This is God’s way of telling you it is unimportant.
  • Always sit on the left side of the table, at the far end from the secretary if you aren’t that person. This way when tasks are being handed out, you are less likely to be volunteered, as you are not in the immediate line of sight of either the chair or the secretary.

If you prefer meatier fare, try this paper from Philippe Aghion, John Van Reenen, and Luigi Zingales, “Innovation and Institutional Ownership,” which examines a version of the lazy-manager hypothesis:

We find that institutional ownership in publicly traded companies is associated with more innovation (measured by cite-weighted patents). To explore the mechanism through which this link arises, we build a model that nests the lazy-manager hypothesis with career-concerns, where institutional owners increase managerial incentives to innovate by reducing the career risk of risky projects. The data supports the career concerns model. First, whereas the lazy manager hypothesis predicts a substitution effect between institutional ownership and product market competition (and managerial entrenchment generally), the career-concern model allows for complementarity. Empirically, we reject substitution effects. Second, CEOs are less likely to be fired in the face of profit downturns when institutional ownership is higher. Finally, using instrumental variables, policy changes and disaggregating by type of owner we find that the effect of institutions on innovation does not appear to be due to endogenous selection.

Entry filed under: - Klein -, Corporate Governance, Management Theory, Strategic Management, Theory of the Firm.

Lynch ‘Em My Naïveté

7 Comments Add your own

  • 1. John Wilkins  |  3 December 2009 at 8:13 pm

    My god. I had no idea there actually *was* a Lazy Manager Theory. I’ve been riffing off this stuff for decades now…

  • 2. David Gerard  |  4 December 2009 at 12:03 am

    Pure awesomeness.

    Now I have to rewrite my Theory of the Firm syllabus.

  • 3. John Wilkins  |  4 December 2009 at 12:14 am

    Please send me the relevant section, so I can show my department head I am relevant outside philosophy (Peter: I did a PhD in history and philosophy of science, and I now have an Assoc. Professorship teaching philosophy).

  • 4. Peter Klein  |  4 December 2009 at 12:18 am

    John, thanks for the correction. And don’t get me started on the lazy-department-head theory!

  • 5. John Wilkins  |  4 December 2009 at 12:24 am

    Errr… I *was* department head. I had a budget of $2million/year and 12 staff. It worked best when I was doing very little management (or perhaps I did very little when it worked best. Hard to separate out cause from effect here).

  • 6. Peter Klein  |  4 December 2009 at 12:26 am

    I had in mind academic department heads. :-)

  • 7. John Wilkins  |  4 December 2009 at 12:27 am

    Give me time.

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