Abstract
ABSTRACT Recent comparative measures rank Israel very high on the innovation scale and note its preference for informal managerial practices. Based on a principal–agent analysis, this article explains that the economic and administrative systems in Israel have created the basis for the evolution of a managerial culture characterised by constant distortions and the gaming of performance information, lack of truthful reporting and improvisation. On the positive side, this managerial culture encourages innovation; on the negative side, it creates significant problems related to accountability, ethical conduct and overall managerial quality.
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