Dessein, Wouter, Garicano, Luis and Gertner, Robert
Organizing for synergies.
American economic journal: microeconomics, 2
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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.
||© 2010 American Economic Association
||coordination, incentives, task allocation, incomplete contracts, merger implementation, scope of the firm, organizational design, multidivisional firms
|Library of Congress subject classification:
||H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
|Journal of Economic Literature Classification System:
||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
||Research centres and groups > Managerial Economics and Strategy Group
Departments > Economics
Departments > Management
Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
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