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Coordination and the Structure of Firms

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  • Stanley Reiter

Abstract

This paper presents a model in which organizational structure emerges as the solution of an optimization problem. The objective is to compute the desired decisions in a given class of economic environments, and the constraints express limitation on the abilities of agents to compute and communicate. The "variable" to be solved for, whose values are interpreted as different organizational structures, is a type of directed graph (an EADAG). Depending on its structure, a solution graph may represent organization into one or more informationally independent units. The structure of solution graphs is derived from the nature of the coordination problem as expressed by the desired decision function.

Suggested Citation

  • Stanley Reiter, 1995. "Coordination and the Structure of Firms," Discussion Papers 1121, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  • Handle: RePEc:nwu:cmsems:1121
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    File URL: http://www.kellogg.northwestern.edu/research/math/papers/1121.pdf
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    Cited by:

    1. Van Zandt, Timothy, 2003. "Real-Time Hierarchical Resource Allocation with Quadratic Costs," CEPR Discussion Papers 4022, C.E.P.R. Discussion Papers.
    2. John H. Miller, 1995. "Evolving Information Processing Organizations," Working Papers 95-06-053, Santa Fe Institute.
    3. Edna Tusak Loehman & Richard Kiser & Stephen J. Rassenti, 2014. "Cost Share Adjustment Processes for Cooperative Group Decisions About Shared Goods: A Design Approach," Group Decision and Negotiation, Springer, vol. 23(5), pages 1085-1126, September.
    4. Mookherjee, D. & Reichelstein, S., 1996. "Budgeting and Hierarchical Control," Papers 71, Boston University - Industry Studies Programme.
    5. Ioannides, Yannis M., 2012. "Complexity and organizational architecture," Mathematical Social Sciences, Elsevier, vol. 64(2), pages 193-202.
    6. Edna T. Loehman, 2009. "Voluntary Cost-Sharing for Environmental Risk Reduction: A Pollution Abatement Case Study," Group Decision and Negotiation, Springer, vol. 18(4), pages 349-368, July.

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