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Come Together: Firm Boundaries and Delegation

Laura Alfaro (), Nicholas Bloom (), Paola Conconi (), Harald Fadinger, Patrick Legros, Andrew Newman (), Raffaella Sadun () and John van Reenen ()
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Andrew Newman: Boston University and CEPR

No WP2018-13, Boston University - Department of Economics - Working Papers Series from Boston University - Department of Economics

Abstract: Little is known theoretically, and even less empirically, about the relationship between firm boundaries and the allocation of decision rights within firms. We develop a model in which firms choose which suppliers to integrate and whether to delegate decisions to integrated suppliers. We test the predictions of the model using a novel dataset that com- bines measures of vertical integration and delegation for a large set of firms from many countries and industries. In line with the model’s predictions, we find that integration and delegation co-vary positively, and that producers are more likely to integrate sup- pliers in input sectors with greater productivity variation. Further, producers are more likely to integrate suppliers of more important inputs and to delegate decisions to them.

Keywords: Vertical integration; decentralization; real options; supply assurance (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-mic
Date: 2018-05
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http://www.bu.edu/econ/files/2017/03/8way.pdf

Related works:
Working Paper: Come Together: Firm Boundaries and Delegation (2019) Downloads
Working Paper: Come Together: Firm Boundaries and Delegation (2018) Downloads
Working Paper: Come Together: Firm Boundaries and Delegation (2018) Downloads
Working Paper: Come Together: Firm Boundaries and Delegation (2018) Downloads
Working Paper: Come Together: Firm Boundaries and Delegation (2018) Downloads
Working Paper: Come Together: Firm Boundaries and Delegation (2018) Downloads
Working Paper: Come together: firm boundaries and delegation (2018) Downloads
Working Paper: Come Together: Firm Boundaries and Delegation (2018) Downloads
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