Competition, collaboration and organization design

Suraj Prasad and Sebastian Tanase

Journal of Economic Behavior & Organization, 2021, vol. 183, issue C, 1-18

Abstract: We look at the tradeoff between competition and collaboration, and its implications for organization design – in the sense of structure, culture (or shared preferences) and monetary incentives. In our setting, collaboration is essential but costly for agents with different preferences. We consider two structures: an internally competitive (or parallel) structure where agents compete on quality for their projects to be selected by a principal, and an internally noncompetitive (or focussed) structure where the principal mandates a project. As preferences diverge, internal competition leads to higher quality projects, until the need to compromise to facilitate collaboration undoes these gains. As a result, internal competition is most beneficial for the organization for intermediate levels of heterogeneity in preferences.

Keywords: Competition; Collaboration; Culture; Hotelling line; Compromise (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:183:y:2021:i:c:p:1-18

DOI: 10.1016/j.jebo.2020.12.010

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