Coordination and Organization Design: Theory and Micro-Evidence

64 Pages Posted: 7 Oct 2019

See all articles by Wouter Dessein

Wouter Dessein

Columbia Business School - Finance and Economics

Desmond (Ho-Fu) Lo

Santa Clara University, Department of Marketing

Chieko Minami

Kobe University

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Date Written: August 2019

Abstract

We explore the relationship between the volatility of a firm's local environment, the need for coordination among sub-units, and a firm's 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: Coordinated Adaptation, Local information, Local Volatility, Organization Design, Task Delegation

JEL Classification: D21, D22, L2, M5

Suggested Citation

Dessein, Wouter and Lo, Desmond (Ho-Fu) and Minami, Chieko, Coordination and Organization Design: Theory and Micro-Evidence (August 2019). CEPR Discussion Paper No. DP13938. Available at SSRN: https://ssrn.com/abstract=3464458

Wouter Dessein (Contact Author)

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

Desmond (Ho-Fu) Lo

Santa Clara University, Department of Marketing ( email )

500 El Camino Real
Santa Clara, CA California 95053
United States

HOME PAGE: http://www.scu.edu/business/marketing/faculty/lo.cfm

Chieko Minami

Kobe University ( email )

2-1, Rokkodai-cho, Nada-ku
Kobe, 657-8501, 657-8501
Japan

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