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Hierarchies and the Organization of Knowledge in Production

31 Pages Posted: 14 Sep 2000  

Luis Garicano

University of Chicago - Booth School of Business - Economics; Centre for Economic Policy Research (CEPR)

Abstract

This paper studies how communication allows for the specialized acquisition of knowledge. It shows that a knowledge-based hierarchy is a natural way to organize the acquisition of knowledge when matching problems with those who know how to solve them is costly. In such an organization, production workers acquire knowledge about the most common or easiest problems confronted, and specialized problem solvers deal with the more exceptional or harder problems. The paper shows that the model is consistent with stylized facts in the theory of organizations and uses it to analyze the impact of changes in production and information technology on organizational design.

Suggested Citation

Garicano, Luis, Hierarchies and the Organization of Knowledge in Production. Journal of Political Economy, Vol. 108, No. 5, October 2000. Available at SSRN: https://ssrn.com/abstract=241055 or http://dx.doi.org/10.2139/ssrn.241055

Luis Garicano (Contact Author)

University of Chicago - Booth School of Business - Economics ( email )

Graduate School of Business
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Centre for Economic Policy Research (CEPR)

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United Kingdom

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