Document Type
Article
Journal/Book Title/Conference
Economics Research Institute Study Paper
Volume
32
Publisher
Utah State University Department of Economics
Publication Date
2000
Rights
Copyright for this work is held by the author. Transmission or reproduction of materials protected by copyright beyond that allowed by fair use requires the written permission of the copyright owners. Works not in the public domain cannot be commercially exploited without permission of the copyright owner. Responsibility for any use rests exclusively with the user. For more information contact the Institutional Repository Librarian at digitalcommons@usu.edu.
First Page
1
Last Page
26
Abstract
Multi-plant organizations have trouble including both local and global information in their decisions. Outlets know local conditions but headquarters is able to coordinate outlets. In allocating decision-making power, firms must balance coordination and flexibility. I model this tradeoff, and show that the decentralized firm may standardize to avoid costs due to miscoordination. That is, increasingly variable local conditions cause decentralized choices to become less variable. Ex ante, decentralization is more profitable; neither form dominates ex post. Signals from outlets to headquarters improve the performance of the centralized firm, but one can always find conditions under which decentralization is preferred.
Recommended Citation
Hunnicutt, Lynn, "One Boss Or Many? Decision Making and Coordination in the Multi-Plant Firm" (2000). Economic Research Institute Study Papers. Paper 208.
https://digitalcommons.usu.edu/eri/208