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Knowledge-Based Hierarchies: Using Organizations to Understand the Economy

Author

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  • Luis Garicano

    (Department of Economics and Woodrow Wilson School, Princeton University, Princeton, New Jersey 08544-1021)

  • Esteban Rossi-Hansberg

    (Department of Economics and Woodrow Wilson School, Princeton University, Princeton, New Jersey 08544-1021)

Abstract

Incorporating the decision of how to organize the acquisition, use, and communication of knowledge into economic models is essential to understand a wide variety of economic phenomena. We survey the literature that has used knowledge-based hierarchies to study issues such as the evolution of wage inequality, the growth and productivity of firms, economic development, and the gains from international trade, as well as offshoring and the formation of international production teams. We also review the nascent empirical literature that has, so far, confirmed the importance of organizational decisions and many of their more salient implications.

Suggested Citation

  • Luis Garicano & Esteban Rossi-Hansberg, 2015. "Knowledge-Based Hierarchies: Using Organizations to Understand the Economy," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 1-30, August.
  • Handle: RePEc:anr:reveco:v:7:y:2015:p:1-30
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    File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev-economics-080614-115748
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    4. Anna Gumpert & Henrike Steimer & Manfred Antoni, 2018. "Firm Organization with Multiple Establishments," CESifo Working Paper Series 7435, CESifo.
    5. Aleksandr Yakovlevich Rubinstein, 2016. "Theory Of Patronized Goods. Liberal Evolution Of Paternalism," International Journal of Entrepreneurial Knowledge, Center for International Scientific Research of VSO and VSPP, vol. 4(1), pages 6-29, June.
    6. Anna Gumpert, 2018. "The Organization of Knowledge in Multinational Firms," Journal of the European Economic Association, European Economic Association, vol. 16(6), pages 1929-1976.
    7. T. Gries & R. Grundmann & I. Palnau & M. Redlin, 2017. "Innovations, growth and participation in advanced economies - a review of major concepts and findings," International Economics and Economic Policy, Springer, vol. 14(2), pages 293-351, April.
    8. Florian Scheuer & Iván Werning, 2017. "The Taxation of Superstars," The Quarterly Journal of Economics, Oxford University Press, vol. 132(1), pages 211-270.
    9. Bastos, Paulo & Monteiro, Natália P. & Straume, Odd Rune, 2018. "Foreign acquisition and internal organization," Journal of International Economics, Elsevier, vol. 114(C), pages 143-163.
    10. Enghin Atalay & Sebastian Sotelo & Daniel Tannenbaum, 2021. "The Geography of Job Tasks," Working Papers 682, Research Seminar in International Economics, University of Michigan.
    11. Lorenzo Caliendo & Giordano Mion & Luca David Opromolla & Esteban Rossi-Hansberg, 2020. "Productivity and Organization in Portuguese Firms," Journal of Political Economy, University of Chicago Press, vol. 128(11), pages 4211-4257.
    12. Florian Scheuer & Joel Slemrod, 2020. "Taxation and the Superrich," Annual Review of Economics, Annual Reviews, vol. 12(1), pages 189-211, August.
    13. Paul Gaggl & Greg C. Wright, 2017. "A Short-Run View of What Computers Do: Evidence from a UK Tax Incentive," American Economic Journal: Applied Economics, American Economic Association, vol. 9(3), pages 262-294, July.
    14. Gokan, Toshitaka & Kichko, Sergey & Thisse, Jacques-François, 2019. "How do trade and communication costs shape the spatial organization of firms?," Journal of Urban Economics, Elsevier, vol. 113(C).
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    17. Jean-Paul Chavas & Kwansoo Kim, 2016. "On the Microeconomics of Specialization: the Role of Non-Convexity," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 44(3), pages 387-403, September.
    18. Ildikó Magyari, 2017. "Firm Reorganization, Chinese Imports, and US Manufacturing Employment," Working Papers 17-58, Center for Economic Studies, U.S. Census Bureau.
    19. Emanuele Brancati & Raffaele Brancati & Dario Guarascio & Andrea Maresca & Manuel Romagnoli & Antonello Zanfei, 2018. "Firm-level Drivers of Export Performance and External Competitiveness in Italy," European Economy - Discussion Papers 2015 - 087, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    20. Legge, Stefan, 2016. "Innovation in an Aging Population," VfS Annual Conference 2016 (Augsburg): Demographic Change 145590, Verein für Socialpolitik / German Economic Association.
    21. Amaia Iza, 2016. "Entrepreneurial skills, technological progress and firm growth," EcoMod2016 9469, EcoMod.
    22. Gries, T. & Grundmann, R. & Palnau, I. & Redlin, M., 2015. "Does technological change drive inclusive industrialization? : A review of major concepts and findings," MERIT Working Papers 2015-044, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    23. Tobias Stucki & Daniel Wochner, 2019. "Technological and organizational capital: Where complementarities exist," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(3), pages 458-487, June.

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    More about this item

    Keywords

    firms; inequality; skill premium; span of control; wages;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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