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Disobedience and Authority

Author

Listed:
  • Anthony M. Marino

    () (USC)

  • John G. Matsusaka

    () (USC)

  • Jan Zabojnik

    () (Queen's University)

Abstract

This paper 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 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. Evidence from a national survey of organizations shows that worker autonomy is related to separation costs as the theory predicts.

Suggested Citation

  • Anthony M. Marino & John G. Matsusaka & Jan Zabojnik, 2006. "Disobedience and Authority," Working Papers 1109, Queen's University, Department of Economics.
  • Handle: RePEc:qed:wpaper:1109
    as

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    File URL: http://qed.econ.queensu.ca/working_papers/papers/qed_wp_1109.pdf
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Kräkel, Matthias & Müller, Daniel, 2015. "Merger efficiency and managerial incentives," International Journal of Industrial Organization, Elsevier, vol. 41(C), pages 51-63.
    2. Dessein, Wouter, 2012. "Incomplete Contracts and Firm Boundaries: New Directions," CEPR Discussion Papers 9019, C.E.P.R. Discussion Papers.
    3. Robert Gibbons, 2010. "Inside Organizations: Pricing, Politics, and Path Dependence," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 337-365, September.
    4. 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).
    5. 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.
    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.

    More about this item

    Keywords

    Delegation; Authority; Separation Costs; Optimal employment contracts;

    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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