Centralization vs. Decentralization in a Multi-Unit Organization: A Computational Model of a Retail Chain as a Multi-Agent Adaptive System

Myong-Hun Chang () and Joseph E. Harrington ()
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Joseph E. Harrington: Department of Economics, The Johns Hopkins University, Baltimore, Maryland 21218

Management Science, 2000, vol. 46, issue 11, 1427-1440

Abstract: A computational model of a retail chain is developed in which store managers continually search for better practices. Search takes place over a rugged landscape defined over the space of store practices. The main objective of this research is to determine how the amount of discretion given to store managers as to how they run their stores influences the rate of innovation at the store level. We find that greater decentralization enhances firm performance when stores' markets are sufficiently different, the horizon is sufficiently long, and markets are sufficiently stable.

Keywords: organizational structure; decentralization; innovation; retail chain (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (25)

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http://dx.doi.org/10.1287/mnsc.46.11.1427.12085 (application/pdf)

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Working Paper: Centralization vs. Decentralization in a Multi-Unit Organization: A Computational Model of a Retail Chain as a Multi-Agent Adaptive System (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:46:y:2000:i:11:p:1427-1440

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