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Organizing to adapt and compete

Alonso, Ricardo and Dessein, Wouter and Matouschek, Niko (2015) Organizing to adapt and compete. American Economic Journal: Microeconomics, 7 (2). pp. 158-187. ISSN 1945-7669

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Identification Number: 10.1257/mic.20130100


We examine the relationship between the organization of a multi-divisional firm and its ability to adapt production decisions to changes in the environment. We show that even if lower-level managers have superior information about local conditions, and incentive conflicts are negligible, a centralized organization can be better at adapting to local information than a decentralized one. As a result, and in contrast to what is commonly argued, an increase in product market competition that makes adaptation more important can favor centralization rather than decentralization.

Item Type: Article
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Additional Information: © 2014 American Economic Association
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
H Social Sciences > HE Transportation and Communications
JEL classification: D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior; Transaction Costs; Property Rights
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search; Learning; Information and Knowledge; Communication; Belief
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L23 - Organization of Production
Sets: Departments > Management
Research centres and groups > Managerial Economics and Strategy Group
Date Deposited: 05 Aug 2014 09:48
Last Modified: 04 Dec 2015 14:35

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