Abstract
We show that decision making in organizations is typically more complicated than simply choosing either to delegate or to centralize. Firms have to consider not only the level at which a decision is made (authority location) but also how many people are involved (authority diffusion), and the type of communication. Utilizing a unique data set, we estimate a latent-class model to identify frequently adopted combinations of decision-making rights and communication across different hierarchical levels relating to the implementation of a significant change. We identify four typical authority/communication structures that can be loosely categorized as: authoritarian centralization; team decision making; consultative centralization; and decentralization. We then explore the relationships between these four authority/communication structures and other characteristics of the firm, such as the size of the organization, worker skills, long-term employer-employee relationships, individual and group incentives and how close the firm is to the productivity frontier. These results are broadly consistent with recent advances in theory, although no one model is rich enough to fully describe all our findings.
| Original language | English |
|---|---|
| Journal | Journal of Economic Behavior and Organization |
| DOIs | |
| Publication status | Accepted/In press - 2018 Jan 1 |
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Keywords
- Authority
- Centralization
- Consultation
- Decision making
- Delegation
- Latent-class model
- Organizational structure
- Relational contracting
ASJC Scopus subject areas
- Economics and Econometrics
- Organizational Behavior and Human Resource Management
Cite this
Authority and communication in firms. / Katayama, Hajime; Meagher, Kieron J.; Wait, Andrew.
In: Journal of Economic Behavior and Organization, 01.01.2018.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Authority and communication in firms
AU - Katayama, Hajime
AU - Meagher, Kieron J.
AU - Wait, Andrew
PY - 2018/1/1
Y1 - 2018/1/1
N2 - We show that decision making in organizations is typically more complicated than simply choosing either to delegate or to centralize. Firms have to consider not only the level at which a decision is made (authority location) but also how many people are involved (authority diffusion), and the type of communication. Utilizing a unique data set, we estimate a latent-class model to identify frequently adopted combinations of decision-making rights and communication across different hierarchical levels relating to the implementation of a significant change. We identify four typical authority/communication structures that can be loosely categorized as: authoritarian centralization; team decision making; consultative centralization; and decentralization. We then explore the relationships between these four authority/communication structures and other characteristics of the firm, such as the size of the organization, worker skills, long-term employer-employee relationships, individual and group incentives and how close the firm is to the productivity frontier. These results are broadly consistent with recent advances in theory, although no one model is rich enough to fully describe all our findings.
AB - We show that decision making in organizations is typically more complicated than simply choosing either to delegate or to centralize. Firms have to consider not only the level at which a decision is made (authority location) but also how many people are involved (authority diffusion), and the type of communication. Utilizing a unique data set, we estimate a latent-class model to identify frequently adopted combinations of decision-making rights and communication across different hierarchical levels relating to the implementation of a significant change. We identify four typical authority/communication structures that can be loosely categorized as: authoritarian centralization; team decision making; consultative centralization; and decentralization. We then explore the relationships between these four authority/communication structures and other characteristics of the firm, such as the size of the organization, worker skills, long-term employer-employee relationships, individual and group incentives and how close the firm is to the productivity frontier. These results are broadly consistent with recent advances in theory, although no one model is rich enough to fully describe all our findings.
KW - Authority
KW - Centralization
KW - Consultation
KW - Decision making
KW - Delegation
KW - Latent-class model
KW - Organizational structure
KW - Relational contracting
UR - http://www.scopus.com/inward/record.url?scp=85054599316&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85054599316&partnerID=8YFLogxK
U2 - 10.1016/j.jebo.2018.09.005
DO - 10.1016/j.jebo.2018.09.005
M3 - Article
AN - SCOPUS:85054599316
JO - Journal of Economic Behavior and Organization
JF - Journal of Economic Behavior and Organization
SN - 0167-2681
ER -