Strategic Debt with Multi-Task Technologies
Posted: 14 Sep 2000
In this paper it is shown that when employees have ex post bargaining power, the entrepreneur will try to avoid technologies that are based on a large number of complementary tasks. We demonstrate that the entrepreneur can shelter profit from the employees' rent-seeking behaviour by raising debt. Moreover, the strategic use of debt financing can favour the adoption of technologies that rely on synergies.
JEL Classification: G31, J30, L20
Suggested Citation: Suggested Citation