TY - JOUR
T1 - Decentralization, aggregation, control loss and costs in a hierarchical model of the firm
AU - Keren, Michael
AU - Levhari, David
PY - 1989/3
Y1 - 1989/3
N2 - We study the multi-divisional firm with the help of a model which links organizational structure and performance. We add to our previous model an ability to delegate decisions at the cost of control loss, and study its effects on both the structure and the average costs of the firm. Our technique involves the aggregation of observations and disaggregation of commands: the aggregation, while simplifying the calculations by superiors and saving time, introduces error into their decisions. The tradeoff between time and error is taken into account in the construction of the hierarchy.
AB - We study the multi-divisional firm with the help of a model which links organizational structure and performance. We add to our previous model an ability to delegate decisions at the cost of control loss, and study its effects on both the structure and the average costs of the firm. Our technique involves the aggregation of observations and disaggregation of commands: the aggregation, while simplifying the calculations by superiors and saving time, introduces error into their decisions. The tradeoff between time and error is taken into account in the construction of the hierarchy.
UR - http://www.scopus.com/inward/record.url?scp=38249025116&partnerID=8YFLogxK
U2 - 10.1016/0167-2681(89)90014-0
DO - 10.1016/0167-2681(89)90014-0
M3 - ???researchoutput.researchoutputtypes.contributiontojournal.article???
AN - SCOPUS:38249025116
SN - 0167-2681
VL - 11
SP - 213
EP - 236
JO - Journal of Economic Behavior and Organization
JF - Journal of Economic Behavior and Organization
IS - 2
ER -