Delegation in Multi-Establishment Firms: Evidence from I.T. Purchasing
Kristina Steffenson McElheran
Harvard University - Technology & Operations Management Unit
January 30, 2013
Harvard Business School Technology & Operations Mgt. Unit Working Paper No. 11-101
Recent contributions to a growing theory literature have focused on the tradeoff between adaptation and coordination in determining delegation within firms. Empirical evidence, however, is limited. Using establishment-level data on decision rights over information technology investments, I find that a high net value of adaptation is strongly associated with delegation, as are local information advantages and firm-wide diversification; in contrast, a high net value of within-firm coordination is correlated with centralization. Variation across establishments within firms is widespread: most firms are neither fully centralized nor fully decentralized. Delegation patterns are largely consistent with standard team-theory predictions; however, certain findings, such as a negative correlation between delegation and firm size, call for a consideration of agency costs, as well.
Number of Pages in PDF File: 53
JEL Classification: L22, D22, M15, M2working papers series
Date posted: April 5, 2011 ; Last revised: February 1, 2013
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