Rakibi Caydıracak Pazarlama Stratejileri ve Yönetici Teşvik Programları: Bilişsel Hiyerarşi Bazlı Yeni Bakış Açısı
Marketing Strategies for Entry Deterrence and Managerial Compensation: A New Perspective Based on Cognitive Hierarchy

Summary/Abstract: Firms in Turkey have started to practice giving stock options as part of managers compensation. However, in the literature it is not clear that giving stock options would motivate managers to make the right strategic decisions. It is well documented that managers vary in their ability of thinking strategically, and they may not be able to correctly conjecture the actions and beliefs of competitors as assumed in the standard game theory. Given this heterogeneity in managers’ strategic thinking capability and the importance of managerial compensation, it is investigated when it is profitable to compensate managers by giving stock options. The context is chosen in which firms do not have the access to control managers directly, but can motivate them to develop the right marketing strategies to deter entry. Based on Cognitive Hierarchy model stock options are found that they should be used only if both the manager and the rival are strategic or the manager is naive, but not the rival.

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