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Hierarchies Versus Committees: Communication and Information Acquisition in Organizations

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  • Junichiro Ishida

Abstract

In most firms, if not all, workers are divided asymmetrically in terms of authority and responsibility. In this paper, we view the asymmetric allocations of authority and responsibility as essential features of hierarchy and examine why hierarchies often prevail in organizations from that perspective. A key departure is that we consider a case where the authority relationship is defined only by the allocation of responsibility via contingent contracts. Within this framework, we show that the contractual arrangement which allocates responsibility asymmetrically often emerges as the optimal organizational form, which gives rise to the chain of command pertaining to hierarchical organizations.

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  • Junichiro Ishida, 2014. "Hierarchies Versus Committees: Communication and Information Acquisition in Organizations," ISER Discussion Paper 0914, Institute of Social and Economic Research, Osaka University.
    • Handle: RePEc:dpr:wpaper:0914
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    Cited by:

    1. Chongwoo Choe & Shingo Ishiguro, 2022. "Relational Contracts and Hierarchy," Monash Economics Working Papers 2022-08, Monash University, Department of Economics.

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