Author
Abstract
Purpose - – The purpose of this paper is to investigate the optimal allocation of authority within “chain” organizations and to show when partial centralization becomes dominant in the sense of organizational performance. Design/methodology/approach - – This paper takes an incomplete contract approach and uses an information transmission framework to investigate the optimal governance structure, in which non-contractible decisions must be adapted to local operating conditions, and also coordinated with the upstream and downstream divisions. We also use simulation analysis to numerically show the theoretical mapping between the underlying parameters (i.e. coordination need) and the dominant organizational structures. Findings - – Partial decentralization will arise as the optimal governance structure only when the information in the middle branch is relatively concentrated or dispersive, so as to exploit the underlying information structure in the “chain” organizations. Specifically, when information is highly concentrated, direct control of the middle branch can improve coordination within firms. When the information is highly dispersive, to delegate authority to the middle branch only can improve communication. Originality/value - – This paper characterizes the optimal governance structure in “chain” organizations. The findings may give some enlightenment on real authority driven byex anteasymmetric information structures and have implications on asymmetric delegation within firms.
Suggested Citation
Siguang Li & Xi Weng, 2014.
"Partial centralization in three-division organizations,"
Nankai Business Review International, Emerald Group Publishing Limited, vol. 5(2), pages 187-210, May.
Handle:
RePEc:eme:nbripp:v:5:y:2014:i:2:p:187-210
DOI: 10.1108/NBRI-11-2013-0039
Download full text from publisher
As the access to this document is restricted, you may want to
for a different version of it.
Corrections
All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:nbripp:v:5:y:2014:i:2:p:187-210. See general information about how to correct material in RePEc.
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
We have no bibliographic references for this item. You can help adding them by using this form .
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .
Please note that corrections may take a couple of weeks to filter through
the various RePEc services.