Coordination and Organization Design: Theory and Micro-Evidence.
61 Pages Posted: 13 Aug 2019 Last revised: 8 Jan 2020
Date Written: August 10, 2019
We explore the relationship between the volatility of a firm's local environment and its organizational structure. Using micro-level data on a large retailer, we empirically test and provide support for our hypothesis that a more volatile local environment results in more decentralization only when coordination needs are small or moderate. In contrast, more local volatility is associated with more centralization when coordination needs are high. Our evidence supports theories that argue that centralized organizations are better at coping with local shocks when coordinated adaptation is important.
Keywords: Organization Design, Local Volatility, Local Information, Coordination, Task Allocation, Delegation, Coordinated Adaptation
JEL Classification: D21, D22, L2, M5
Suggested Citation: Suggested Citation