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Decentralized Business Strategies in a Multi-Unit Firm

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  • Myong-Hun Chang
  • Joseph E Harrington Jr

Abstract

In a multi-unit firm such as a retail chain or a multi-plant manufacturer we compare the business strategies developed by unit managers with the strategies that maximize corporate profit The setting is one in which units face different markets and where learning spillovers between two units are enhanced if their strategies are more similar When there is a small number of units we find a tendency for managers' strategies to be excessively tailored to their local market When the firm has many units unit strategies can be either excessively or insufficiently standardized

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Bibliographic Info

Paper provided by The Johns Hopkins University,Department of Economics in its series Economics Working Paper Archive with number 418.

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Date of creation: Nov 1998
Date of revision: Aug 1999
Handle: RePEc:jhu:papers:418

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