by Milton Harris and Artur Raviv - Faculty

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Assumption 2, 2r+r 2 s > G, so G J implies T > 2r+r 2 s. impossible. H(Q) L(Q) A(Q), for Q G, D(Q), for Q 4p > Q > G, 4p, for Q Q 4p , A(Q), for Q G, D(Q), for Q 4p > Q > G, E(Q), for Q Q 4p . Q.E.D. Lemma 2 implies that Q K(r,p) T and either T 2r+r 2 s or G > J or J 2r+r 2 s (or any of these) is Case 1: Q B(r,p) max{J,G} Since J Q B(r,p), if Q B(p,r) > 0, Q B(r,p) Q B(p,r). Hence, either Q B(p,r) < 0 or G Q B(r,p) Q B(p,r). In either case, B pr(G) A(G). Therefore, K pr(G) = B pr(G) A(G) = D(G), using (8). Also, G Q B(r,p) implies that B rp(G) A(G), so K rp(G) = B rp(G) A(G) = D(G) as before. Therefore, since D(Q) is less steep than K xy(Q), D(Q) K xy(Q) for all Q G. In particular, since G < 2r+r 2 s, D(2r+r 2 s) > K pr(2r+r 2 s) = 4p. Therefore, Q 4p > 2r+r 2 s, and, for this case, we have that and Moreover, if T > G, then D(T) > K rp(T) = 4p. Therefore, if T > G, then Q 4p > T. Consequently, the optimal organization design in this case for 4F between L(Q) and H(Q) is the decentralized P-hierarchy. The optimal design is pictured in Figure 6. D:\Userdata\Research\Hierarchies\temp.wpd 39 February 22, 2000 (11:18AM) (18) (19)
Case 2: G > Q B(r,p) J and Figure 6: Optimal Organization Design for 0 < max{G,J} Q B(r,p) Note that, by Lemma 2, since G > J, we must have T Q K(r,p). In this case, H(Q) A(Q), for Q Q B (r,p), B rp (Q), Q B (r,p)
Page 1 and 2: ORGANIZATION DESIGN by Milton Harri
Page 3 and 4: eports both to the Project A divisi
Page 5 and 6: CEO President, ABC Norway President
Page 7 and 8: paid if the manager is available to
Page 9 and 10: information at the same time. Delay
Page 11 and 12: (1971), Khandwalla (1974) and Pugh
Page 13 and 14: managers who can discover and coord
Page 15 and 16: order and in which contingencies th
Page 17 and 18: value of the R-hierarchy (net of fi
Page 19 and 20: it is still optimal to use the CEO
Page 21 and 22: hierarchy is that the firm need pay
Page 23 and 24: 5 Comparative Statics For Q Optimal
Page 25 and 26: Figure 5: Optimal Organization Desi
Page 27 and 28: intermediate values of F, the centr
Page 29 and 30: appendix. Proposition 4. Increases
Page 31 and 32: divisional hierarchy. Next we exami
Page 33 and 34: References Baron, David P. and Davi
Page 35 and 36: Recall A(Q) Q(1 p 2 r 2 ) D G Q, B
Page 37 and 38: Similarly, for Q < 2r+r 2 s, K pr(Q
Page 39: is impossible. Therefore, Q B(p,r)
Page 43 and 44: and H(Q) L(Q) A(Q), for Q Q B (r,p)
Page 45 and 46: Case 6: J > Q B(r,p), J > G > Q B(p
Page 47 and 48: L(Q) A(Q), for Q Q B (p,r), C pr (Q
Page 49: for X = M, CP, CR, and CF implies t

by Milton Harris and Artur Raviv - Faculty

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