This paper analyzes the issue of implementing correlated and communication equilibria when pre-play communication is restricted to a particular network (e.g., a hierarchy). When communication between the mediator and the players is not direct and private, as assumed when invoking the revelation...

This paper offers a rationale for limiting the delegation of (real) authority, which neither relies on insurance arguments nor depends on ownership structure. We analyse a repeated hidden action model in which the actions of a risk neutral agent determine his future outside option. Consequently,...

Projects are embedded in multiple systemic contexts, e.g. organizations, interorganizational networks and organizational fields, which jointly facilitate and constrain project organizing. As projects partly evolve in idiosyncratic ways as temporary systems, embedding needs to be understood as a...

When complete contracting is not possible, allocating control structure becomes the second-best arrangement. This paper analyzes the design of optimal divisional structure within an organization where ex post bargaining between the potential divisional managers is possible. In much the same...

In contemporary market economies, firms typically adopt one or another of a small number of standard organizational forms, both in terms of ownership and in terms of commitments to contractual counterparties. This review essay, prepared as a chapter for the forthcoming Handbook of Organizational...

Recent studies indicate that firms often outsource standard and simple tasks, while keeping complex and important inputs inside their boundaries. This observation is difficult to reconcile with the property rights approach of the firm, which suggests that important components should be...

This paper empirically investigates how the level of authority delegation is related to the performance of an organization. Decentralized, horizontal organizational structure takes advantage of more efficient decision making, mainly due to more efficient use of "soft" information. The cost of...

Hayek (1945) argues that local information is a key to understanding the efficiency of alternative economic systems and whether production should be centralized or decentralized. The Chinese experience of decentralizing SOEs confirms this insight: when the distance to the government is farther,...

Previous research has consistently demonstrated a positive relation between firm size and skill premium. We decompose this result by type of skilled worker using data from Chilean firms and find that returns in skill premium to size are an order of magnitude larger for owners and managers...

Modeling firms as networks of employees, occasional collaborative decision making around the office watercooler changes long run employee behavior (corporate culture). The culture that emerges in a given team of employees depends on team size and on how the team is connected to the wider firm....