Technology, information and the decentralization of the firm
By: Daron Acemoglu ... [et al.].
Contributors: London School of Economics and Political Science. Centre for Economic Performance
Series: CEP discussion paper -- no. 722; Discussion paper (London School of Economics and Political Science. Centre for Economic Performance : Online) -- no. 722.
Publisher: Centre for Economic Performance, London School of Economics and Political Science
Published: 2006
Place of publication: London
Language: eng
Format: [electronic resource] /
Description: This paper develops a framework to analyze the relationship between the diffusion of new technologies and the decentralization decisions of firms. Centralized control relies on the information of the principal, which we equate with publicly available information.  Decentralized control, on the other hand, delegates authority to a manager with superior  information. However, the manager can use her informational advantage to make choices that are not in the best interest of the principal. As the available public information about the  specific technology increases, the trade-off shifts in favour of centralization. We show that  firms closer to the technological frontier, firms in more heterogeneous environments and  younger firms are more likely to choose decentralization. Using three datasets of French and British firms in the 1990s, we report robust correlations consistent with these predictions.
Notes: Title from PDF file (viewed on May 31, 2006).

"May 2006."

Includes bibliographical references.

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