Author Abstract
In an increasing number of industries, firms choose how much control to give professionals over the provision of their services to clients. We study the tradeoffs that arise in choosing between a traditional mode (where the firm takes control of service provision) and a platform mode (where professionals retain control over service provision). The choice of mode is determined by the need to balance two-sided moral hazard problems arising from investments that only professionals can make and investments that only the firm can make, while at the same time minimizing distortions in decisions that either party could make (e.g., promotion and marketing of professionals' services, price setting, choice of service offering, etc.).
Paper Information
- Full Working Paper Text
- Working Paper Publication Date: July 2015
- HBS Working Paper Number: 16-002
- Faculty Unit(s): Strategy