Hart, Oliver and Moore, John (1999) On the design of hierarchies: coordination versus specialization. TE (375). Suntory and Toyota International Centres for Economics and Related Disciplines, London, UK.
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Abstract
We develop a model of hierarchies based on the allocation of authority. A firm's owners have ultimate authority over a firm's decisions, but they have limited time or capacity to exercise this authority. Hence owners must delegate authority to subordinates. However, these subordinates also have limited time or capacity and so further delegation must occur. We analyze the optimal chain of command given that different agents have different tasks: some agents are engaged in coordination and others in specialization. Our theory throws light on the nature of hierarchy, the optimal degree of decentralization, and the boundaries of the firm.
| Item Type: | Monograph (Discussion Paper) |
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| Official URL: | http://sticerd.lse.ac.uk |
| Additional Information: | © 1999 the authors |
| Divisions: | Financial Markets Group Economics STICERD |
| Subjects: | H Social Sciences > HD Industries. Land use. Labor |
| JEL classification: | L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L22 - Firm Organization and Market Structure: Markets vs. Hierarchies; Vertical Integration; Conglomerates; Subsidiaries D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior; Transaction Costs; Property Rights |
| Date Deposited: | 14 Jul 2008 08:49 |
| Last Modified: | 15 Sep 2023 22:46 |
| URI: | http://eprints.lse.ac.uk/id/eprint/19340 |
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