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Coordinating Changes in M-form and U-form Organizations

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  • Yingyi Qian
  • Gerard Roland
  • Chenggang Xu

Abstract

We introduce a method of modelling coordination inside an organization as a process of "attribute matching." Using this method, we compare organizational forms (U-form and M-form) in coordinating changes. In our model, organizational forms affect the information structure of an organization and thus the way to coordinate changes. Compared to the U-form, the M-form organization achieves better coordination but suffers from higher costs due to a lack of scale economies or a lack of what we call "attribute compatibility." The M-form has a distinctive advantage in carrying out experimentation which gives the organization more flexibility leading to more innovation and reform. We apply our theory to business firms, transition economies, and the organization of government (especially federalism). In the case of transition economies, our theory relates the initial conditions of organizational differences with reform strategies, especially the "big-bang" approach in Eastern Europe and the "experimental" approach in China.

Suggested Citation

  • Yingyi Qian & Gerard Roland & Chenggang Xu, 1999. "Coordinating Changes in M-form and U-form Organizations," William Davidson Institute Working Papers Series 284, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:1999-284
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    Cited by:

    1. Eric Maskin & Yingyi Qian & Chenggang Xu, 2000. "Incentives, Information, and Organizational Form," Review of Economic Studies, Oxford University Press, vol. 67(2), pages 359-378.
    2. Yingyi Qian, 1999. "The Institutional Foundations of China's Market Transition," Working Papers 99011, Stanford University, Department of Economics.

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    Keywords

    organization; M-form; U-form; innovation; transition; organization of government; experimentation;
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