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Tight and Loose Coupling in Organizations

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  • Pancs Romans

    (Department of Economics, ITAM, Mexico City, Mexico)

Abstract

Some industries have consumers who seek novelty and firms that innovate vigorously and whose organizational structure is loosely coupled, or easily adaptable. Other industries have consumers who take comfort in the traditional and firms that innovate little and whose organizational structure is tightly coupled, or not easily adaptable. This paper proposes a model that explains why the described features tend to covary across industries. The model highlights the pervasiveness of equilibrium inefficiency (innovation can be insufficient or excessive) and the nonmonotonicity of welfare in the equilibrium amount of innovation.

Suggested Citation

  • Pancs Romans, 2017. "Tight and Loose Coupling in Organizations," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 17(1), pages 1-33, January.
    • Handle: RePEc:bpj:bejtec:v:17:y:2017:i:1:p:33:n:6
    DOI: 10.1515/bejte-2015-0081
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    References listed on IDEAS

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