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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

Abstract

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
Official URL: http://www.aeaweb.org/aej-micro/
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
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
URI: http://eprints.lse.ac.uk/id/eprint/58647

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