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Optimal Dissent in Organizations

Author

Listed:
  • Augustin Landier
  • D. Sraer
  • David Thesmar

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

Abstract

We model an organization as a two-agent hierarchy: an informed Decision Maker in charge of selecting projects and a (possibly) uninformed Implementer in charge of their execution. Both have intrinsic preferences over projects. This paper models the costs and benefits of divergence between their preferences, that is, dissent within the organization. Dissent is useful to (1) foster the use of objective (and sometimes private) information in decision making and (2) give credibility to the Decision Maker's choices. However, dissent comes at the cost of hurting the Implementer's intrinsic motivation, thereby impairing organizational efficiency. We show that dissent can be optimal, in particular, when information is useful and uncertainty is high. Moreover, dissent remains an optimal organizational form even when Implementers can choose their employer or when Decision Makers have real authority over hiring decisions.

Suggested Citation

  • Augustin Landier & D. Sraer & David Thesmar, 2009. "Optimal Dissent in Organizations," Post-Print hal-00461108, HAL.
    • Handle: RePEc:hal:journl:hal-00461108
    DOI: 10.1111/j.1467-937X.2009.00544.x
    as

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    Keywords

    Dissent; Optimal Dissent;

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