Delegation in multi-establishment firms
Subtitle: adaptation vs. coordination in I.T. purchasing authority
By: Kristina Steffenson McElheran
Contributors: Harvard Business School
Series: Working paper / Harvard Business School -- 11-101; Working paper (Harvard Business School) -- 11-101.
Publisher: Harvard Business School
Published: 2011
Place of publication: [Boston]
Language: eng
Number of pages: 42
Description: This paper conducts one of the first large-scale, establishment-level empirical studies of delegation within firms. Recent contributions to a rapidly growing theory literature have focused on the tradeoff between adaptation and coordination in determining organizational structure, but empirical evidence is extremely limited. Theoretically, delegation of authority is expected when locally adapted choices are most important to the overall value of the firm, when local information advantages are significant, or when the cost of processing firm-wide information at the center grows too great. Centralization is predicted when the value of firm-wide coordination dominates these adaptation and information-processing concerns. Based on a novel data set containing information on establishment-level decision rights over information technology investments, I find robust conditional correlations consistent with some, but not all of these predictions. A relatively high economic value of adaptation at the establishment has a strong association with delegation to local managers, as do local information advantages and greater firm-wide diversification. In contrast, a high value of within-firm coordination as measured by the value of integrated production is negatively correlated with delegation. Surprisingly, absolute size of the firm is negatively related to delegation. The overall pattern of results highlights the need for a nuanced theoretical framework that can accommodate the full range of empirical facts.
Notes: "April 2011"--Publisher's website.

Includes bibliographical references.