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Codes in Organizations

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  • Crémer, Jacques
  • Garicano, Luis
  • Prat, Andrea

Abstract

A code is a technical language that members of an organization learn in order to communicate among themselves and with members of other organizations. What are the features of an optimal code and how does it interact with the characteristics of the organization? This Paper develops a simple communication model and characterizes optimal codes. There exists a fundamental trade-off between choosing a specialized code that simplifies internal communication and a common code that facilitates external communication. We identify the drivers of this trade-off and we study the strategic aspects of code adoption. The results are used to interpret some existing organizational structures.

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Bibliographic Info

Paper provided by Institut d'Économie Industrielle (IDEI), Toulouse in its series IDEI Working Papers with number 172.

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Date of creation: 2003
Date of revision: Feb 2005
Handle: RePEc:ide:wpaper:1575

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References

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  1. Van Reenen, John & Caroli, Eve, 2001. "Skill-Biased Organizational Change? Evidence from a panel of British and French establishments," Economics Papers from University Paris Dauphine 123456789/10093, Paris Dauphine University.
  2. Birger Wernerfelt, 2004. "Organizational Languages," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(3), pages 461-472, 09.
  3. Raghuram Rajan & Julie Wulf, 2003. "The Flattening Firm: Evidence from Panel Data on the Changing Nature of Corporate Hierarchies," NBER Working Papers 9633, National Bureau of Economic Research, Inc.
  4. Luis Garicano, 2000. "Hierarchies and the Organization of Knowledge in Production," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 874-904, October.
  5. Jacques Cremer, 1980. "A Partial Theory of the Optimal Organization of a Bureaucracy," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 683-693, Autumn.
  6. Mathias Dewatripont & Patrick Bolton, 1994. "The firm as a communication network," ULB Institutional Repository 2013/9595, ULB -- Universite Libre de Bruxelles.
  7. Duncan Simester & Marc Knez, 2002. "Direct and Indirect Bargaining Costs and the Scope of the Firm," The Journal of Business, University of Chicago Press, vol. 75(2), pages 283-304, April.
  8. Erik Brynjolfsson & Lorin M. Hitt, 2000. "Beyond Computation: Information Technology, Organizational Transformation and Business Performance," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 23-48, Fall.
  9. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 2002. "Information Technology, Workplace Organization, And The Demand For Skilled Labor: Firm-Level Evidence," The Quarterly Journal of Economics, MIT Press, vol. 117(1), pages 339-376, February.
  10. Luis Garicano & Esteban Rossi-Hansberg, 2005. "Organization and Inequality in a Knowledge Economy," NBER Working Papers 11458, National Bureau of Economic Research, Inc.
  11. Radner, Roy, 1993. "The Organization of Decentralized Information Processing," Econometrica, Econometric Society, vol. 61(5), pages 1109-46, September.
  12. Pierpaolo Battigalli & Giovanni Maggi, 2002. "Rigidity, Discretion, and the Costs of Writing Contracts," American Economic Review, American Economic Association, vol. 92(4), pages 798-817, September.
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Citations

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Cited by:
  1. Luis Garicano & Rosa Lastra, 2010. "Towards a New Architecture for Financial Stability: Seven Principles," CEP Discussion Papers dp0990, Centre for Economic Performance, LSE.
  2. Gavilan, Angel, 2012. "Wage inequality, segregation by skill and the price of capital in an assignment model," European Economic Review, Elsevier, vol. 56(1), pages 116-137.
  3. Strauss-Kahn, Vanessa & Vives, Xavier, 2006. "Why and where do headquarters move?," IESE Research Papers D/650, IESE Business School.
  4. Ángel Gavilán, 2006. "Wage inequality, segregation by skill and the price of capital in an assignment model," Banco de Espa�a Working Papers 0613, Banco de Espa�a.
  5. Mathias Dewatripont & Jean Tirole, 2005. "Modes of communication," ULB Institutional Repository 2013/9631, ULB -- Universite Libre de Bruxelles.
  6. Garicano, Luis & Prat, Andrea, 2011. "Organizational Economics with Cognitive Costs," CEPR Discussion Papers 8372, C.E.P.R. Discussion Papers.
  7. Garicano, Luis & Posner, Richard A., 2005. "Intelligence Failures: An Organizational Economics Perspective," CEPR Discussion Papers 5186, C.E.P.R. Discussion Papers.
  8. Gomes, Orlando, 2008. "Interaction in organizations: A dynamic choice of codes," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(4), pages 1570-1583, August.

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