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Multimarket Competition, Consumer Search, and the Organizational Structure of Multiunit Firms

Author

Listed:
  • Myong-Hun Chang

    () (Department of Economics, Cleveland State University, Cleveland, Ohio 44115)

  • Joseph E. Harrington, Jr

    () (Department of Economics, Johns Hopkins University, Baltimore, Maryland 21218)

Abstract

This research explores how market competition influences a firm's optimal organizational structure. For this purpose, a computational model of competing multiunit firms is developed in which unit managers and corporate staff continually search for better practices, while consumers search among units to find a better match. Organizational structure impacts both the practices at the unit level and the extent of knowledge transfer. An increasing returns mechanism is identified, which results in the relative performance of the centralized form being greater when competition is more intense.

Suggested Citation

  • Myong-Hun Chang & Joseph E. Harrington, Jr, 2003. "Multimarket Competition, Consumer Search, and the Organizational Structure of Multiunit Firms," Management Science, INFORMS, vol. 49(4), pages 541-552, April.
  • Handle: RePEc:inm:ormnsc:v:49:y:2003:i:4:p:541-552
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    File URL: http://dx.doi.org/10.1287/mnsc.49.4.541.14426
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    References listed on IDEAS

    as
    1. Myong-Hun Chang & Joseph E. Harrington, 2000. "Centralization vs. Decentralization in a Multi-Unit Organization: A Computational Model of a Retail Chain as a Multi-Agent Adaptive System," Management Science, INFORMS, vol. 46(11), pages 1427-1440, November.
    2. Aghion, Philippe & Tirole, Jean, 1997. "Formal and Real Authority in Organizations," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 1-29, February.
    3. Myong-Hun Chang & Joseph E Harrington, 2000. "Organization of Innovation in a Multi-Unit Firm: Coordinating Adaptive Search on Multiple Rugged Landscapes," Economics Working Paper Archive 442, The Johns Hopkins University,Department of Economics.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Chang, Myong-Hun & Harrington, Joseph Jr., 2006. "Agent-Based Models of Organizations," Handbook of Computational Economics,in: Leigh Tesfatsion & Kenneth L. Judd (ed.), Handbook of Computational Economics, edition 1, volume 2, chapter 26, pages 1273-1337 Elsevier.
    2. Nicolai J. Foss & Kenneth Husted & Snejina Michailova, 2010. "Governing Knowledge Sharing in Organizations: Levels of Analysis, Governance Mechanisms, and Research Directions," Journal of Management Studies, Wiley Blackwell, vol. 47(3), pages 455-482, May.
    3. Linda Argote & Bill McEvily & Ray Reagans, 2003. "Managing Knowledge in Organizations: An Integrative Framework and Review of Emerging Themes," Management Science, INFORMS, vol. 49(4), pages 571-582, April.
    4. Jason Barr & Nobuyuki Hanaki, 2005. "Firm Structure, Search and Environmental Complexity," Working Papers Rutgers University, Newark 2005-007, Department of Economics, Rutgers University, Newark.
    5. Konur, Dinçer & Geunes, Joseph, 2016. "Supplier wholesale pricing for a retail chain: Implications of centralized vs. decentralized retailing and procurement under quantity competition," Omega, Elsevier, vol. 65(C), pages 98-110.
    6. Jorge Colazo, 2016. "A Cognitive Load View And Empirical Test Of Collaboration Network Structure Versus Learning Rates In New Software Development," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 20(01), pages 1-28, January.

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