When does centralization undermine adaptation?

• 成果类型: Article
• 署名作者: Liu, Shuo; Migrow, Dimitri
• 署名单位: Peking University; University of Edinburgh
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2022.105533
• 发表日期: 2022
• 关键词: Centralization; decentralization; Coordinated adaptation; information acquisition; Verifiable disclosure

摘要

We revisit the classic problem of optimally allocating decision rights in a multi-divisional organization. To be able to adapt its decisions to local conditions, the organization has to rely on self-interested division managers to collect and disseminate the relevant information. We show that if division managers are certain about how the headquarter (HQ) weights each division's performance, centralization may always dominate decentralization in generating information, and therefore even lead to more adaptative decisions. However, with uncertainty in HQ's decision criterion, centralization can perform poorly in motivating information acquisition, and particularly so when it is highly important to coordinate the activities of different divisions. As a result, decentralization can be optimal even with an arbitrarily strong coordination motive.(c) 2022 Elsevier Inc. All rights reserved.