On the Design of Hierarchies: Coordination Versus Specialization

Oliver D. Hart and John Moore

Harvard Institute of Economic Research Working Papers from Harvard - Institute of Economic Research

Abstract: We develop a model of hierarchies based on the allocation of authority. A firm's owners have ultimate authority over a firm's decisions, but they have limited time or capacity to exercise this authority. Hence owners must delegate authority to subordinates. However, these subordinates also have limited time or capacity and so further delegation must occur. We analyze the optimal chain of command given that different agents have different tasks: some agents are engaged in coordination and others in specialization. Our theory throws light on the nature of hierarchy, the optimal degree of decentralization, and the boundaries of the firm.

Date: 1999
View citations in EconPapers

Downloads: (external link)
ftp://all.repec.org/RePEc/fth/harver/hier1880.pdf (application/pdf)

Related works:
Working Paper: On the Design of Hierarchies: Coordination Versus Specialization (1999)
Working Paper: On the Design of Hierarchies: Coordination versus Specialization (2004)
Working Paper: On the Design of Hierarchies: Coordination Versus Specialization (1999)
Journal Article: On the Design of Hierarchies: Coordination versus Specialization (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:fth:harver:1880

Access Statistics for this paper

More papers in Harvard Institute of Economic Research Working Papers from Harvard - Institute of Economic Research
Contact information at EDIRC.
Series data maintained by Thomas Krichel ().