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Organizational Languages

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  • Birger Wernerfelt

Abstract

This paper is concerned with communication within a team of players trying to coordinate in response to information dispersed among them. The problem is nontrivial because they cannot communicate all information instantaneously but have to send longer or shorter sequences of messages, using coarse codes. We focus on the design of these codes and show that members may gain compatibility advantages by using identical codes and that this can support the existence of several, more or less efficient, symmetric equilibria. Asymmetric equilibria may exist only if coordination across different sets of members is of sufficiently different importance. The results are consistent with the stylized fact that firms differ even within industries and that coordination between divisions is harder than coordination inside divisions. Copyright 2004 Blackwell Publishing, 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington Road, Oxford OX4 2DQ, UK..

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  • Birger Wernerfelt, 2004. "Organizational Languages," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(3), pages 461-472, September.
    • Handle: RePEc:bla:jemstr:v:13:y:2004:i:3:p:461-472
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    References listed on IDEAS

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    Cited by:

    1. Ziebarth, Deborah, 2016. "Altruistic and economic measurements used for prevention health services: Faith community nursing program," Evaluation and Program Planning, Elsevier, vol. 57(C), pages 72-79.
    2. Jacques Crémer & Luis Garicano & Andrea Prat, 2007. "Language and the Theory of the Firm," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 373-407.
    3. Marco LiCalzi & Nadia Maagli, 2013. "Bargaining over a common conceptual space," Working Papers 30, Department of Management, Università Ca' Foscari Venezia.
    4. Massimo Warglien, 2013. "Language and economic organization," Chapters,in: Handbook of Economic Organization, chapter 8 Edward Elgar Publishing.
    5. Blume, Andreas, 2000. "Coordination and Learning with a Partial Language," Journal of Economic Theory, Elsevier, vol. 95(1), pages 1-36, November.
    6. Lauren Feiler & Colin F. Camerer, 2010. "Code Creation In Endogenous Merger Experiments," Economic Inquiry, Western Economic Association International, vol. 48(2), pages 337-352, April.
    7. Birger Wernerfelt, 2013. "Small forces and large firms: Foundations of the RBV," Strategic Management Journal, Wiley Blackwell, vol. 34(6), pages 635-643, June.
    8. Hirokazu Takizawa, 2003. "Coordination Costs and the Optimal Partition of a Product Design," Discussion papers 03014, Research Institute of Economy, Trade and Industry (RIETI).

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