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Teamwork Efficiency and Company Size

Listed author(s):
  • 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)

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.

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Article provided by De Gruyter in its journal The B.E. Journal of Theoretical Economics.

Volume (Year): 16 (2016)
Issue (Month): 1 (January)
Pages: 337-366

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Handle: RePEc:bpj:bejtec:v:16:y:2016:i:1:p:337-366:n:1
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  1. Krishna B. Kumar & Raghuram G. Rajan & Luigi Zingales, "undated". "What Determines Firm Size?," CRSP working papers 496, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
  2. Michaël Bikard & Fiona Murray & Joshua S. Gans, 2015. "Exploring Trade-offs in the Organization of Scientific Work: Collaboration and Scientific Reward," Management Science, INFORMS, vol. 61(7), pages 1473-1495, July.
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