Coordinating Changes in M-Form and U-Form Organizations

Posted: 13 May 1999

See all articles by Yingyi Qian

Yingyi Qian

Tsinghua University - School of Economics & Management; Centre for Economic Policy Research (CEPR)

Gérard Roland

University of California, Berkeley - Department of Economics; Centre for Economic Policy Research (CEPR)

Chenggang Xu

University of Hong Kong

Date Written: April 1998

Abstract

We compare organizational forms (U-form and M-form) in coordinating changes such as innovations in business firms and reforms in transition economies. In our model, organizational forms affect the information structure of an organization, and thus the way to coordinate changes and to experiment proposals for innovation. Compared to the U-form, the M-form organization achieves better coordination but also involves higher costs due to a lack of scale economies. Dynamically, the M-form has a distinct advantage in lowering the costs of experimentation. Our analysis sheds light on the effect of the organizational structure of business firms on their propensity to innovate. It also applies to transition economies where we observe strikingly different organizational structures between the Central and Eastern European and the former Soviet Union economies (the U form) and the Chinese economy (the M-form). We relate these differences in organizational structure to differences in reform strategy: the 'big-bang' reform approach in the former and the 'experimental' or 'gradual' reform approach in the latter. '

JEL Classification: D21, D23, P21

Suggested Citation

Qian, Yingyi and Roland, Gérard and Xu, Chenggang, Coordinating Changes in M-Form and U-Form Organizations (April 1998). Available at SSRN: https://ssrn.com/abstract=163108

Yingyi Qian (Contact Author)

Tsinghua University - School of Economics & Management

Beijing, 100084
China

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Gérard Roland

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States
510-642-4321 (Phone)
510-642-6615 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Chenggang Xu

University of Hong Kong ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

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