Expansion of Production Capacity and Provision of Effort Incentives

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This study analyzes the performance evaluation using leading indicators under the long-term contract relationship between the firm's owner and the manager and examines the cost of effort provision and of inducing the manager to stay at the firm. This study showed that leading indicators contributes to the provision of effort incentives, while the effort incentive for skill improvement of the manager is not always strengthen by the efficiency, complementarity of efforts. Additionally, this study showed that there exists the case the weight of a leading indicator can be negative, as in the prior research