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Determinants of Decentralization within the Firm: Some Empirical Evidence from Spanish Small and Medium- Sized Enterprise

  • Pérez, Jessica Helen
  • Iranzo Sancho, Susana

This paper examines empirically the determinants of decentralization of decision- making in the firm for small and medium-sized enterprises (SMEs) that tend to be highly centralized. By decentralization of decisions we mean the delegation of decision rights from the owner or manager to the plant supervisor or even to floor workers. Our findings show that the allocation of authority to basic workers or a team of workers depends on firm characteristics such as firm size, the use of internal networks or the number of workplaces, and workers characteristics, in particular, the composition of the laborforce in terms of education and seniority and whether or not workers receive pay incentives. External factors such as the intensity of competition and the firm s export intensity are also important determinants of the allocation of authority.

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File URL: http://hdl.handle.net/2072/211755
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Paper provided by Universitat Rovira i Virgili, Department of Economics in its series Working Papers with number 2072/211755.

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Date of creation: 2012
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Handle: RePEc:urv:wpaper:2072/211755
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Avda. de la Universitat,1 - 43204 Reus (Tarragona)

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Web page: http://www.urv.cat
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  1. POITEVIN, Michel, 2000. "Innis Lecture: Can the Theory of Incentives Explain Decentralization?," Cahiers de recherche 2000-13, Universite de Montreal, Departement de sciences economiques.
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  7. Timothy van Zandt, 1999. "Real-Time Decentralized Information Processing as a Model of Organizations with Boundedly Rational Agents," Review of Economic Studies, Oxford University Press, vol. 66(3), pages 633-658.
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  11. Geanakoplos, John & Milgrom, Paul, 1991. "A theory of hierarchies based on limited managerial attention," Journal of the Japanese and International Economies, Elsevier, vol. 5(3), pages 205-225, September.
  12. Caroli, Eve & Greenan, Nathalie & Guellec, Dominique, 2001. "Organizational Change and Skill Accumulation," Industrial and Corporate Change, Oxford University Press, vol. 10(2), pages 481-506, June.
  13. Massimo G. Colombo & Marco Delmastro, 2004. "Delegation of Authority In Business Organizations: An Empirical Test," Journal of Industrial Economics, Wiley Blackwell, vol. 52(1), pages 53-80, 03.
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  18. Michel Poitevin, 2000. "Can the theory of incentives explain decentralization?," Canadian Journal of Economics, Canadian Economics Association, vol. 33(4), pages 878-906, November.
  19. Alonso, Ricardo & Dessein, Wouter & Matouschek, Niko, 2006. "When Does Coordination Require Centralization?," CEPR Discussion Papers 5802, C.E.P.R. Discussion Papers.
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  25. Marin, Dalia & Verdier, Thierry, 2003. "Globalization and the new enterprise," Munich Reprints in Economics 19256, University of Munich, Department of Economics.
  26. Sah, Raaj Kumar & Stiglitz, Joseph E, 1988. "Committees, Hierarchies and Polyarchies," Economic Journal, Royal Economic Society, vol. 98(391), pages 451-70, June.
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  28. repec:dau:papers:123456789/10092 is not listed on IDEAS
  29. Radner, Roy, 1993. "The Organization of Decentralized Information Processing," Econometrica, Econometric Society, vol. 61(5), pages 1109-46, September.
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