Organizational structure and innovative activity

Dirk Sliwka

Economics of Governance, 2003, vol. 4, issue 3, 187-214

Abstract: A model is analyzed in which agents exert effort to create innovations within an organization. When payments are infeasible, the decision on the implementation of a proposal is shown to be made by simple monotonic decision rules. Organizational structure is then determined by a collection of decision rules. A trade-off arises between the use of information and the incentives created by a rule. If the former dominates it will currently be optimal to install a hierarchy. Otherwise decentralization by granting autonomy to innovators may be better. Requiring unanimous decision-making is optimal if a strong filtering of proposals is necessary. Copyright Springer-Verlag Berlin/Heidelberg 2003

Keywords: Decision rules; delegation; authority; incentives; organizational structure (search for similar items in EconPapers)
Date: 2003
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DOI: 10.1007/s10101-002-0054-y

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