 A MULTI‐TASK PRINCIPAL‐AGENT APPROACH TO ORGANIZATIONAL FORM*David Besanko, Pierre Regibeau and Katharine Rockett Journal of Industrial Economics, 2005, vol. 53, issue 4, 437-467 Abstract: This paper studies the choice of organizational forms in a multi‐task principal‐agent model. We compare a functional organization in which the firm is organized into functional departments such as marketing and R&D to a product‐based organization in which the firm is organized into product lines. Managers' compensation can be based on noisy measures of product‐line profits. Measures of a functional area's contribution to total profits are not available, however. This effect favors the product organization. However, if there are significant asymmetries between functional area contributions to organizational success and cross‐product externalities within functions, organizing along functional lines may dominate the product organization. The functional organization can also dominate when a function is characterized by strong externalities while the other is not. Date: 2005 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:jindec:v:53:y:2005:i:4:p:437-467 Ordering information: This journal article can be ordered from Access Statistics for this article Journal of Industrial Economics is currently edited by Pierre Regibeau, Yeon-Koo Che, Kenneth Corts, Thomas Hubbard, Patrick Legros and Frank Verboven More articles in Journal of Industrial Economics from Wiley Blackwell |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to econpapers@oru.se.
EconPapers is hosted by the
School of Business at Örebro University.