The paper analyzes the choice of organizational structure as solution to the trade-off between controlling behavior based on authority rights and minimizing costs for implementing high efforts. The analysis includes the owner of a firm, a top manager and two division heads. If it is more...

Recent years have witnessed an enormous amount of reorganization of the corporate sector in the US and in Europe. This paper examines the role of market competition for this trend in corporate reorganization. We find that at intermediate levels of competition the CEO of the corporation decides...

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...

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...

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....

Globalization has been identified by many experts as a new way firms organize their activities and as the emergence of human capital as the new stakeholder of the firm. This paper surveys recent work which examines the role of trade integration for these changes in corporate organization. More...