Organizational Design and Technology Choice Under Intrafirm Bargaining
Posted: 19 Feb 2014
Date Written: March 1, 1996
We consider a wide number of applications of an intrafirm bargaining game within organizations where employees and the firm engage in wage negotiations. Under our presumption that contracts cannot bind employees to the organization, the resulting stable wage and profit profiles give rise to an objective function for the firm that places weight on inframarginal profits in an economically significant manner. We in turn employ this methodology to explore applications of organizational design, hiring and capital decisions, training and cross-training, the importance of labor and asset specificity, managerial hierarchies, preferences for unionization, responses to competition, and internal capital budgeting.
Keywords: contract theory, incentives
JEL Classification: C70, D23, G31, J30, L20
Suggested Citation: Suggested Citation