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Teamwork Efficiency and Company Size

Author

Listed:
  • Galashin Mikhail

    () (Department of Political Science, University of California Los Angeles, Los Angeles, CA, USA)

  • Popov Sergey V.

    () (Management School, Queen’s University Belfast, 185 Stranmillis Rd, Belfast, Co Antrim BT9 5EE, UK)

Abstract

We study how ownership structure and management objectives interact in determining the company size without assuming information constraints or any explicit costs of management. In symmetric agent economies, the optimal company size balances the returns to scale of the production function and the returns to collaboration efficiency. For a general class of payoff functions, we characterize the optimal company size, and we compare the optimal company size across different managerial objectives. We demonstrate the restrictiveness of common assumptions on effort aggregation (e.g., constant elasticity of effort substitution), and we show that common intuition (e.g., that corporate companies are more efficient and therefore will be larger than equal-share partnerships) might not hold in general.

Suggested Citation

  • Galashin Mikhail & Popov Sergey V., 2016. "Teamwork Efficiency and Company Size," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 16(1), pages 337-366, January.
    • Handle: RePEc:bpj:bejtec:v:16:y:2016:i:1:p:337-366:n:1
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    References listed on IDEAS

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    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D2 - Microeconomics - - Production and Organizations
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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