Decentralization, interdependence and performance measurement system design: sequences and priorities

M.A. Abernethy, Jan Bouwens and Laurence van Lent

No 28, Discussion Paper from Tilburg University, Center for Economic Research

Abstract: We investigate the determinants of decentralization and performance measurement choices in multidivisional firms. We extend the research on the economics of organizational design choices by examining the impact of two important determinants of those choices, namely, subunit interdependencies and knowledge transfer costs. We test our predictions with a simultaneous equation model that captures the endogenous choices relating to the level of decentralization and the use of alternative subunit performance measures using data collected from 78 business units. Our findings are generally consistent with our predictions.

JEL-codes: D23 L22 M12 M4 (search for similar items in EconPapers)
Date: 2001
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Persistent link: http://EconPapers.repec.org/RePEc:dgr:kubcen:200128

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