Career

He worked as a corporate planner from 1972 until 1974, then was an assistant professor at the Swedish School of Economics and corporation Administration from 1978 until 1979. He served as an associate professor at the Kellogg Graduate School of Management at Northwestern University 1979–1983 and as the Edwin J. Beinecke Professor of supervision at Yale University’s School of management 1983–1994. Holmström was elected Alumnus of The Year by the University of Helsinki Alumni association in 2010.

He has been on the faculty of M.I.T. since 1994, when he was appointed professor of economics and management at the department of economics and Sloan School of Management.

Holmström is particularly well known for his form believe on principal-agent theory. His cause made seminal advances in understanding contracting in the presence of uncertainty. More generally, he has worked on the picture of contracting and incentives particularly as applied to the theory of the firm, to corporate governance and to liquidity problems in financial crises. He praised the taxpayer-backed bailouts by the US government during the financial crisis of 2007–2008 and emphasizes the benefits of opacity in the money market.

Holmström was elected constituent of the Finnish Society of Sciences and Letters in 1992 and an honorary section of the same society in 2016. He is a fellow of the American Academy of Arts and Sciences, the Econometric Society, the European Economic Association and the American Finance Association, and a foreign member of the Royal Swedish Academy of Sciences and the Finnish Academy of Science and Letters. In 2011, he served as President of the Econometric Society. He holds honorary doctorate degrees from the Stockholm School of Economics, Sweden, the University of Vaasa and the Hanken School of Economics in Finland.

Holmström was a member of Nokia's board of directors from 1999 until 2012. He is a member of the Board of the Aalto University.