IDEAS home Printed from https://ideas.repec.org/a/oup/jleorg/v28y2012i3p486-517.html
   My bibliography  Save this article

On the Optimality of Multi-tier Hierarchies: Coordination versus Motivation

Author

Listed:
  • Chongwoo Choe
  • Shingo Ishiguro

Abstract

We study internal organization of a firm that comprises a CEO and two division managers. The two key ingredients of our model are externalities among divisions' projects that may require coordination and effort incentives for the CEO and the two division managers. Depending on how decision authority over each project is allocated, we compare various organizational structures including centralization, different forms of partial and full delegation, and hierarchical delegation. We identify conditions under which different organizational structures can be Pareto ranked. We also discuss the optimal pattern of hierarchical delegation and offer various examples of organizational restructuring in large corporations that our theory can shed light on. The Author 2011. Published by Oxford University Press on behalf of Yale University. All rights reserved. For Permissions, please email: journals.permissions@oup.com, Oxford University Press.

Suggested Citation

  • Chongwoo Choe & Shingo Ishiguro, 2012. "On the Optimality of Multi-tier Hierarchies: Coordination versus Motivation," Journal of Law, Economics, and Organization, Oxford University Press, vol. 28(3), pages 486-517, August.
  • Handle: RePEc:oup:jleorg:v:28:y:2012:i:3:p:486-517
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/jleo/ewr022
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Beckmann, Michael & Cornelissen, Thomas & Kräkel, Matthias, 2017. "Self-managed working time and employee effort: Theory and evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 133(C), pages 285-302.
    2. repec:bla:scandj:v:119:y:2017:i:2:p:295-311 is not listed on IDEAS
    3. Kräkel, Matthias, 2013. "Authority and Incentives in Organizations," IZA Discussion Papers 7271, Institute for the Study of Labor (IZA).
    4. Kräkel, Matthias, 2013. "Authority and Incentives in Organizations," IZA Discussion Papers 7271, Institute for the Study of Labor (IZA).
    5. Choe Chongwoo & Park In-Uck, 2011. "Information, Authority, and Corporate Hierarchies," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 11(1), pages 1-39, February.
    6. 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.
    7. Kiyotaki, Fumi & Miyakawa, Toshiji, 2012. "The choice of organizational form under intrafirm bargaining rules," Journal of the Japanese and International Economies, Elsevier, vol. 26(3), pages 369-392.
    8. Kräkel, Matthias, 2018. "Empowerment and the Dark Side of Delegation," IZA Discussion Papers 11289, Institute for the Study of Labor (IZA).

    More about this item

    Statistics

    Access and download statistics

    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:oup:jleorg:v:28:y:2012:i:3:p:486-517. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum). General contact details of provider: https://academic.oup.com/jleo .

    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 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.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.