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Decentralized Business Strategies in a Multi-Unit Firm

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  • Myong-Hun Chang
  • Joseph E Harrington Jr

Abstract

In a multi-unit firm such as a retail chain or a multi-plant manufacturer we compare the business strategies developed by unit managers with the strategies that maximize corporate profit The setting is one in which units face different markets and where learning spillovers between two units are enhanced if their strategies are more similar When there is a small number of units we find a tendency for managers' strategies to be excessively tailored to their local market When the firm has many units unit strategies can be either excessively or insufficiently standardized

Suggested Citation

  • Myong-Hun Chang & Joseph E Harrington Jr, 1998. "Decentralized Business Strategies in a Multi-Unit Firm," Economics Working Paper Archive 418, The Johns Hopkins University,Department of Economics, revised Aug 1999.
  • Handle: RePEc:jhu:papers:418
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    Cited by:

    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. 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.

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