Journal Article

Governing Adaptation

Heikki Rantakari

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 75, issue 4, pages 1257-1285
Published in print October 2008 | ISSN: 0034-6527
Published online October 2008 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.1111/j.1467-937X.2008.00518.x
Governing Adaptation

More Like This

Show all results sharing these subjects:

  • Information, Knowledge, and Uncertainy
  • Firm Objectives, Organization, and Behaviour
  • Economics
  • Corporate Governance

GO

Show Summary Details

Preview

To remain competitive, an organization must both respond to information about its environment and coordinate its activities. We analyse how the allocation of decision rights within an organizational hierarchy influences the organization's ability to solve such problems of coordinated adaptation when information is both soft and distributed inside the organization and the organizational participants behave strategically. The results show that, contrary to the common intuition, the performance differential between centralized and decentralized decision-making is non-monotone in the importance of coordination. Further, both these common structures are dominated by asymmetric structures in sufficiently asymmetric environments (such as a small division developing a new product in the presence of a large division with an established product). Finally, if the incentive conflicts between the participants can be made sufficiently small, centralized decision-making is always dominated by decentralized decision-making.

Keywords: D83; G32; L25; M20

Journal Article.  13294 words.  Illustrated.

Subjects: Information, Knowledge, and Uncertainy ; Firm Objectives, Organization, and Behaviour ; Economics ; Corporate Governance

Full text: subscription required

How to subscribe Recommend to my Librarian

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content.