Marc Knez
Clinical Professor of Strategic Management
Biography
Marc J. Knez studies strategic and organizational decision making, strategic planning, and market analysis. His academic research evolved from a focus on applying game theory and decision theory to strategic decisionmaking to a focus on market analysis, strategy development, and organizational structure. His work has appeared in the Harvard Business Review, the Journal of Business, and the Journal of Labor Economics. Among his articles are "Across the Board Incentives," Harvard Business Review (February 2002); "Direct and Indirect Bargaining Costs and the Scope of the Firm," the Journal of Business (April 2002); and "Firm-wide Incentives and Mutual Monitoring At Continental Airlines," Journal of Labor Economics (October 2001). All were written with Duncan Simester. He also has published in the Financial Times Mastering Strategy Series. Titles include "Game Theory in the Real World" and "Vertical Integration: Make or Buy Decisions" both written with Robert Gertner and published in November 1999.
Knez has been a full-time management consultant working with clients in financial services, telecommunications equipment, hospitality, and consumer products. During his time as a consultant, he was a senior vice president of Sibson Consulting and a Principal at the Capital H Group. He is currently on the board of directors of the Metropolitan Capital Bank.
He believes his past experience provides him with the ability to bring both perspectives to the classroom. He specializes in bridging the gap between academic research and applied decisionmaking in the context of strategic planning and technology strategy. He also has brought this perspective to executive education. He has taught executives at the Financial Management Program at General Electric, and the McKinsey & Co. mini-MBA program, as well as conducted customized education for Northrop Grumman, MTV Networks Asia, Metropolitan Life, and the William Wrigley Jr. Company.
Knez earned a bachelor's degree in economics at the University of Arizona and a PhD in decision sciences at the Wharton School at the University of Pennsylvania in 1991.
When not teaching or conducting research, Knez enjoys spending time with his family and playing golf.
Selected Publications
With Duncan Simester, "Across the Board Incentives," Harvard Business Review (February 2002).
With Duncan Simester, "Direct and Indirect Bargaining Costs and the Scope of the Firm," Journal of Business (April 2002).
With Duncan Simester, "Firm-wide Incentives and Mutual Monitoring At Continental Airlines," Journal of Labor Economics (October 2001).
With Robert Gertner, "Game Theory in the Real World," Financial Times Mastering Strategy Series (November 1999).
With Robert Gertner, "Vertical Integration: Make or Buy Decisions," Financial Times Mastering Strategy Series (November 1999).
For a listing of research publications, please visit the university library listing page.
Working Papers
Direct and Indirect Bargaining Costs and the Scope of the Firm
Date Posted:Thu, 29 Jun 2000 16:20:38 -0500
We compare the magnitude of bargaining costs within and between firms. The results are derived from a unique dataset comparing internal and external transactions for the same categories of parts at a single high-technology firm. They confirm that direct bargaining costs are higher with external suppliers, at least in part because there is more to bargain over. The need to negotiate price and formal contracts typically leads to longer ex ante negotiations and an increased likelihood of ex post renegotiations when circumstances change. We also observed higher indirect bargaining costs with external suppliers. The introduction of procurement specialists to external supply relationships disperses information and decision-making more widely across the organization. Moreover, information that may hinder contractual negotiations is often either suppressed or delayed and, because engineers are unable or unwilling to enforce these information restrictions, all communication with external suppliers passes through procurement personnel. The data suggests that these differences greatly hinder coordination and contribute to the determination of which parts are made internally versus externally.
Direct and Indirect Bargaining Costs and the Scope of the Firm
Date Posted:Thu, 29 Jun 2000 07:20:38 -0500
We compare the magnitude of bargaining costs within and between firms. The results are derived from a unique dataset comparing internal and external transactions for the same categories of parts at a single high-technology firm. They confirm that direct bargaining costs are higher with external suppliers, at least in part because there is more to bargain over. The need to negotiate price and formal contracts typically leads to longer ex ante negotiations and an increased likelihood of ex ...
Firm-Wide Incentives and Mutual Monitoring at Continental Airlines
Date Posted:Mon, 20 Mar 2000 12:19:54 -0600
In February 1995 Continental Airlines introduced an incentive scheme that promised monthly bonuses to all 35,000 hourly employees if the company achieved a firm-wide performance goal. Conventional wisdom suggests that free riding will render such schemes ineffective. We study the impact of the Continental scheme by comparing the change in performance at airports where workers were eligible for the scheme and airports where they were not. A combination of cross-sectional and time-series data ...
Firm-Wide Incentives and Mutual Monitoring at Continental Airlines
Date Posted:Mon, 20 Mar 2000 07:47:45 -0600
In February 1995 Continental Airlines introduced an incentive scheme that promised monthly bonuses to all 35,000 hourly employees if the company achieved a firm-wide performance goal. Conventional wisdom suggests that free riding will render such schemes ineffective. We study the impact of the Continental scheme by comparing the change in performance at airports where workers were eligible for the scheme and airports where they were not. A combination of cross-sectional and time-series data enables us to control for both airport differences and intervening industry or firm changes. The results offer support for claims that the incentive scheme raised employee performance despite the apparent threat of free riding. To explain why the scheme may have been effective we argue that, despite its size, Continental is able to exploit some of the benefits enjoyed by small firms. In particular, the organization of employees into autonomous work groups enables it to induce mutual monitoring among employees within each work group. Moreover, interdependencies between airports magnify the impact of each work group's performance on overall firm performance, so that firm level measures are sufficient to motivate each group to choose high effort.