Bureaucracy as a Mechanism to Generate Information

Walter Novaes and Luigi Zingales

No 9763, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Firms that maintain no formal record of actions and events would hardly be considered well managed. Yet, organizations that require the recording of actions and the filing of reports are often labeled bureaucratic' and inefficient. This paper argues that the thin line between efficient management practices and inefficient bureaucracy is crossed to curb managerial agency costs in a multi-layer hierarchy. The model predicts that bureaucracy increases with the frequency of managerial turnover, and it establishes a link between bureaucracy, incentive schemes, and leverage in a cross-section of firms.

JEL-codes: D2 G3 (search for similar items in EconPapers)
Date: 2003-06
New Economics Papers: this item is included in nep-cfn
Note: CF
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Citations: View citations in EconPapers (14)

Published as Novaes, Walter and Luigi Zingales. "Bureaucracy as a Mechanism to Generate Information." RAND Journal of Economics 35, 2 (Summer 2004): 245-59.

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Journal Article: Bureaucracy as a Mechanism to Generate Information (2004)
Working Paper: Bureaucracy as a Mechanism to Generate Information (2003)
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