Specific knowledge, investment decision and organizational architecture
AbstractWithin the theoretical framework of organizational architecture, this paper attempts to explain the decentralization of investment decision. To do so, it highlights the role of the allocation of decision rights and control as a factor explaining the effectiveness of investment management. Thus, the object of this research is, first, to strengthen the relevance of the theoretical corpus of Fama and Jensen (1983a, 1983b) and Jensen and Meckling (1992), and, secondly, to replicate the studies by Noda and Bower (1996), Fahmi (1999) and Catelin (2001) and extend them to the Tunisian context. The Tunisian example is relevant because of the lack of research on the topic for this country, and also because this research could improve decision making for investment in the current context of Tunisia. We show that the role played by organizational complexity, information and communication technology, training programs, and evaluation and incentive systems in the creation of value requires the setting of a centralized organizational structure. An empirical test was conducted on a sample of 63 Tunisian firms by using canonical analysis. This test allowed the validation of four out of the five tested hypotheses.
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Bibliographic InfoPaper provided by Université de Bourgogne - Crego EA 7317/Fargo (Research center in Finance,organizational ARchitecture and GOvernance) in its series Working Papers FARGO with number 1110501.
Length: 19 pages
Date of creation: May 2011
Date of revision:
Contact details of provider:
Postal: 2 Bd Gabriel, BP 26611, 21066 Dijon Cedex, France
Web page: http://leg2.u-bourgogne.fr/FARGO/
Postal: Gérard Charreaux, Fargo-Leg, Université de Bourgogne 2 Bd Gabriel, BP 26611, 21066 Dijon Cedex, France
Find related papers by JEL classification:
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Park, Albert & Shen, Minggao, 2008. "Refinancing and decentralization: Evidence from China," Journal of Economic Behavior & Organization, Elsevier, vol. 66(3-4), pages 703-730, June.
- Ghazi Zouari, 2011. "The corporate investment decision process and control systems," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 4(1), pages 20-53.
- James A. Brickley & Clifford W. Smith & Jerold L. Zimmerman, 1997. "Management Fads And Organizational Architecture," Journal of Applied Corporate Finance, Morgan Stanley, vol. 10(2), pages 24-39.
- Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-25, June.
- James A. Brickley & Clifford W. Smith & Jerold L. Zimmerman, 2003. "Corporate Governance, Ethics, And Organizational Architecture," Journal of Applied Corporate Finance, Morgan Stanley, vol. 15(3), pages 34-45.
- Wruck, Karen Hopper & Jensen, Michael C., 1994. "Science, specific knowledge, and total quality management," Journal of Accounting and Economics, Elsevier, vol. 18(3), pages 247-287, November.
- Gérard Charreaux, 2004. "Michael Jensen-la théorie positive de l’agence et ses applications à l’architecture et à la gouvernance des organisations," Working Papers FARGO 1041203, Université de Bourgogne - Crego EA 7317/Fargo (Research center in Finance,organizational ARchitecture and GOvernance).
- Demsetz, Harold, 1988. "The Theory of the Firm Revisited," Journal of Law, Economics and Organization, Oxford University Press, vol. 4(1), pages 141-61, Spring.
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