Dessein, Wouter, Garicano, Luis 
ORCID: 0009-0002-9738-0945 and Gertner, Robert
(2010)
Organizing for synergies.
American Economic Journal: Microeconomics, 2 (4).
pp. 77-114.
ISSN 1945-7669
Abstract
Large companies are usually organized into business units, yet some activities are almost always centralized in a company-wide functional unit. We first show that organizations endogenously create an incentive conflict between functional managers (who desire excessive standardization) and business-unit managers (who desire excessive local adaptation). We then study how the allocation of authority and tasks to functional and business-unit managers interacts with this endogenous incentive conflict. Our analysis generates testable implications for the likely success of mergers and for the organizational structure and incentives inside multidivisional firms.
| Item Type: | Article |
|---|---|
| Official URL: | http://www.aeaweb.org/aej-micro/index.php |
| Additional Information: | © 2010 American Economic Association |
| Divisions: | Economics Management Centre for Economic Performance |
| Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor |
| JEL classification: | D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior; Transaction Costs; Property Rights D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D86 - Economics of Contract: Theory G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L22 - Firm Organization and Market Structure: Markets vs. Hierarchies; Vertical Integration; Conglomerates; Subsidiaries |
| Date Deposited: | 29 Jun 2011 09:32 |
| Last Modified: | 11 Sep 2025 07:54 |
| URI: | http://eprints.lse.ac.uk/id/eprint/37001 |
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