Distributional Conflict in Organisations

Roman Inderst, Holger Mueller and Wärneryd, Karl
Authors registered in the RePEc Author Service: Karl Wärneryd

No 3315, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Hierarchy can function as an instrument to channel influence activities or power struggles in organizations. Contrary to what has frequently been argued, we show that multi-divisional organizations may involve lower influence costs than single-tier organizations, even though they offer more scope for organizational conflict and have more executives that can be influenced. These benefits derive from two effects. First, part of the conflict in multi-divisional organizations takes place on the division level, where a small number of agents fight over only a fraction of the overall prize. Second, by grouping agents into common divisions, multi-divisional organizations create free-rider problems in rent seeking. We apply our framework to divestitures and the transition from the U- to the M-form by US corporations in the 1920s.

Keywords: Hierarchy; Conflict; Influence activities; U-form versus m-form (search for similar items in EconPapers)
JEL-codes: C72 D74 G31 G34 (search for similar items in EconPapers)
Date: 2002-04
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Journal Article: Distributional conflict in organizations (2007)
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