Essays in sales force compensation and matching models

This dissertation is composed of two essays. In the first essay, titled 'Bonuses or Commissions? An Empirical Analysis of the Impact of Incentive Schemes on Sales Productivity', I explore the effects of quota-based bonus and quota-based commissions on sales groups' behavior. Using highly detailed data of multiple sales groups for 12 quarters from a firm with 458 sales groups, in the present study, I seek to uncover the differential efficacies of these two distinct schemes. In my specific context, I find that a commission plan increases sales force productivity by around 20% over the bonus plan. I also find that the switch from the bonus to the commission plan has heterogeneous effects across teams of differential abilities. Specifically, the increase in productivity of the teams at the bottom of the productivity distribution is much larger than the increase in productivity of teams above the median. Additionally, I find that both the firm and salespeople are better off under the commission plan. From the firm's side, the additional incentives paid out under the commission plan are more than compensated by the increase in sales, while salespersons on average make more in incentive pay. On the other hand, I also find evidence that the bonus scheme is much better than commissions in terms of engaging sales teams in tasks that are not directly related to output but could potentially provide long-term benefits to a firm.;In the second essay, titled 'A Two-Sided Matching Model of Acquisitions' I build and estimate a structural matching model to uncover the primitives that govern the matching process in an acquisitions context. Using data on acquisitions from the software and pharmaceuticals industries, I examine empirically how acquirer brand architecture and acquirer marketing and R&D resources, interact with target marketing and R&D resources and contribute to match valuation and match formation. As expected, I find, first, that a house of brands acquirer values target marketing resources much more than a branded-house acquirer does. More specifically, a house-of-brands acquirer and a target with high marketing resources are more likely to generate a higher match-specific value than a branded-house acquirer and a target with high marketing resources. Second, I find that the acquiring firm's marketing resources are complementary to target firm's R&D resources. More specifically, matches between acquirers with high marketing resources and targets with high R&D resources are more likely to occur and also generate high match-specific value. Third, I find differences in how the stock market reacts to announcements of high and low valuation matches. Specifically, acquirers in matches with low valuations experience significant negative abnormal returns on and around the announcement date, while targets in those matches experience significantly higher positive returns.