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Disobedience and Authority

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  • Ján Zábojník

Abstract

This article presents a theory of the allocation of authority in an organization in which centralization is limited by the agent's ability to disobey the principal. We extend the concept of real authority by observing that not only does the principal have to be informed to give an order but also the worker must be willing to follow the order. We show that workers are given more authority when they are costly to replace or do not mind looking for another job, even if they have no better information than the principal. The allocation of authority thus depends on external market conditions as well as the information and agency problems emphasized in the literature. We explore the implications of this insight for hiring policies and managerial styles. The Author 2009. Published by Oxford University Press on behalf of Yale University. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

Suggested Citation

  • Ján Zábojník, 2010. "Disobedience and Authority," Journal of Law, Economics, and Organization, Oxford University Press, vol. 26(3), pages 427-459.
  • Handle: RePEc:oup:jleorg:v:26:y::i:3:p:427-459
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    File URL: http://hdl.handle.net/10.1093/jleo/ewp005
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    References listed on IDEAS

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    Cited by:

    1. ITOH Hideshi, 2015. "Organizing for Change: Preference diversity, effort incentives, and separation of decision and execution," Discussion papers 15082, Research Institute of Economy, Trade and Industry (RIETI).
    2. Junichiro Ishida, 2015. "Hierarchies Versus Committees: Communication and Information Acquisition in Organizations," The Japanese Economic Review, Japanese Economic Association, vol. 66(1), pages 62-88, March.
    3. Kräkel, Matthias & Müller, Daniel, 2015. "Merger efficiency and managerial incentives," International Journal of Industrial Organization, Elsevier, vol. 41(C), pages 51-63.
    4. Canice Prendergast, 2015. "The economics of wild goose chases," RAND Journal of Economics, RAND Corporation, vol. 46(1), pages 146-164, March.
    5. Robert Gibbons, 2010. "Inside Organizations: Pricing, Politics, and Path Dependence," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 337-365, September.
    6. Emre Ekinci & Nikos Theodoropoulos, 2018. "Informal Delegation and Training," University of Cyprus Working Papers in Economics 02-2018, University of Cyprus Department of Economics.
    7. Bing Guo, 2016. "Manager replacement, employee protest, and corporate control," Economics of Governance, Springer, vol. 17(3), pages 265-294, August.
    8. Dessein, Wouter, 2012. "Incomplete Contracts and Firm Boundaries: New Directions," CEPR Discussion Papers 9019, C.E.P.R. Discussion Papers.

    More about this item

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics

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