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Coordination and Organization Design: Theory and Micro-evidence

Wouter Dessein, Lo, Desmond (Ho-Fu) and Chieko Minami

No 13938, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We explore the relationship between the volatility of a firm's local environment, the need for coordination among sub-units, and a firm's organizational structure. Using micro-level data on a large retailer, we empirically test and provide support for our hypothesis that a more volatile local environment results in more decentralization only when coordination needs are small or moderate. In contrast, more local volatility is associated with more centralization when coordination needs are high. Our evidence supports theories that argue that centralized organizations are better at coping with local shocks when coordinated adaptation is important.

Keywords: Coordinated Adaptation; Local information; Local Volatility; Organization Design; Task Delegation (search for similar items in EconPapers)
JEL-codes: D21 D22 L2 M5 (search for similar items in EconPapers)
Date: 2019-08
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