Strategic debt with multi-task technologies

• Published in: The Canadian journal of economics Vol. 33; no. 1; pp. 252 - 270
• Main Author: Dalmazzo, Alberto
• Format: Journal Article
• Language: English
• Published: Boston, USA and Oxford, UK Blackwell Publishers Inc 01.02.2000; Blackwell Publishers; University of Toronto Press for the Canadian Economics Association; Blackwell Publishing Ltd
• Subjects: Bargaining power; Capital investments; Capital structure; Corporate debt; Corporate finance; Credit; Debt; Debt financing; Debt reduction; Economic impact; Economic models; Economic theory; Effects; Employees; Entrepreneurs; Financial investments; Financial management; Investment; Investment decisions; Investment strategies; Labor contracts; Lenders; Loan defaults; Public debt; Technology; Wages & salaries
• ISSN: 0008-4085; 1540-5982
• DOI: 10.1111/0008-4085.00014

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 /// Dette stratégique en présence de technologies impliquant plusieurs tâches. Ce mémoire montre que quand les eḿployés ont un pouvoir de négociation ex post, l'entrepreneur va tenter d'éviter les technologies qui sont basées sur un grand nombre de tâches complémentaires. On montre que l'entrepreneur peut protéger ses profits des activités de chasse aux rentes des employés en accroissant sa dette. De plus, l'utilisation stratégique du financement par la dette peut favoriser l'adoption de technologies qui dépendent de synergies.