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Organizational Languages

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  • Wernerfelt, Birger

Abstract

The paper is concerned with communication within a team of players trying to coordinate in response to information dispersed among them. The problem is non-trivial because they cannot communicate all information instantaneously, but have to send longer or shorter sequences of messages, using coarse codes. We focus on the design of these codes and show that members may gain comaptibility advantages by using identical codes, and that this can support the existence of several, more or less efficient, symmetric equilibria. Asymmetric eqilibria exist if coordination across different sets of members is of differing importance, and fewer symmetric equilibria exist if the members' local environments are sufficiently heterogeneous. The results are consistent with the stylized fact that firms differ even within industries, and that coordination between divisions is harder than coordination inside divisions.

Suggested Citation

  • Wernerfelt, Birger, 2003. "Organizational Languages," Working papers 4278-03, Massachusetts Institute of Technology (MIT), Sloan School of Management.
  • Handle: RePEc:mit:sloanp:1812
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    File URL: http://hdl.handle.net/1721.1/1812
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    Cited by:

    1. Jacques Crémer & Luis Garicano & Andrea Prat, 2007. "Language and the Theory of the Firm," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 373-407.
    2. Marco LiCalzi & Nadia Maagli, 2013. "Bargaining over a common conceptual space," Working Papers 30, Department of Management, Università Ca' Foscari Venezia.
    3. Massimo Warglien, 2013. "Language and economic organization," Chapters,in: Handbook of Economic Organization, chapter 8 Edward Elgar Publishing.
    4. Birger Wernerfelt, 2013. "Small forces and large firms: Foundations of the RBV," Strategic Management Journal, Wiley Blackwell, vol. 34(6), pages 635-643, June.
    5. Blume, Andreas, 2000. "Coordination and Learning with a Partial Language," Journal of Economic Theory, Elsevier, vol. 95(1), pages 1-36, November.
    6. Ziebarth, Deborah, 2016. "Altruistic and economic measurements used for prevention health services: Faith community nursing program," Evaluation and Program Planning, Elsevier, vol. 57(C), pages 72-79.
    7. Lauren Feiler & Colin F. Camerer, 2010. "Code Creation In Endogenous Merger Experiments," Economic Inquiry, Western Economic Association International, vol. 48(2), pages 337-352, April.
    8. Hirokazu Takizawa, 2003. "Coordination Costs and the Optimal Partition of a Product Design," Discussion papers 03014, Research Institute of Economy, Trade and Industry (RIETI).

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