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Firm Organization and Market Structure: Centralization vs. Decentralization

Organizational Economics Proceedings

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Title Firm Organization and Market Structure: Centralization vs. Decentralization
 
Creator Meagher, Kieron
Wang, Wen
 
Description The protability of a rm is jointly determined by it's organizational structure and the market structure. To explore the eects of market factors on optimal organizational structure we develop a real-time information processing model of a multi unit rm in a dynamic duopoly environment. Our model is the rst to match with recent empirical nding We nd decentralization dominates for products with short lifecycles but in general there is no unique optimal organization structure over time - when product market competition is intense, decentralization outperforms centralization in the initial phase of the product lifecycle, centralization is superior in the intermediate phase, and decentralization outperforms again at the nal phase. Thus organizational change also appears to be a natural part of the lifecycle as well as a response to economic shocks. Moreover, we also nd that the performance of decentralization is superior when: (i) consumer tastes are more homogenous; (ii) consumers are more sensitive to store practices; and (iii) a larger number of markets are served.
 
Publisher The University of Sydney
 
Contributor —
 
Date 2014-10-03
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
—
 
Format application/pdf
 
Identifier https://openjournals.library.sydney.edu.au/index.php/OEW/article/view/8081
 
Source Organizational Economics Proceedings; Vol 3, No 1 (2014): 8th Annual Organizational Economics Workshop July 2014
2201-8468
 
Language eng
 
Relation https://openjournals.library.sydney.edu.au/index.php/OEW/article/view/8081/8206