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Organizational Diseconomies of Scale Author info | Abstract | Publisher info | Download info | Related research | Statistics McAfee, R Preston
McMillan, John
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Private information creates a cost of operating a hierarchy, which becomes larger as the hierarchical distance between the information source and the decision maker increases. When information about a firm's capabilities is dispersed among the individuals in the firm, production is inefficient even though everyone behaves rationally. Because hierarchies need rents in order to function, a firm with a long hierarchy may not be viable in a competitive industry. Copyright 1995 by MIT Press.
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Article provided by Blackwell Publishing in its journal Journal of Economics & Management Strategy .
Volume (Year): 4 (1995)
Issue (Month): 3 (Fall)
Pages: 399-426
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Handle: RePEc:bla:jemstr:v:4:y:1995:i:3:p:399-426Contact details of provider: Web page: http://www.kellogg.northwestern.edu/research/journals/JEMS/
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