The Experts below are selected from a list of 174 Experts worldwide ranked by ideXlab platform

Yossi Spiegel - One of the best experts on this subject based on the ideXlab platform.

  • A Double Moral Hazard Model of Organization Design
    Journal of Economics & Management Strategy, 2010
    Co-Authors: Elazar Berkovitch, Ronen Israel, Yossi Spiegel
    Abstract:

    We develop a theory of organization design in which the firm’s Structure is chosenbytradingoffexpostefficiencyintheimplementationofprojectsagainst ex ante efficiency in the selection of projects. Using our framework, we derive a novel set of empirical predictions regarding differences between firms with a functional Structure and firms with a Divisional Structure. We examine how the overall profitability of the two Structures is affected by various factors like size, complexity, and asymmetry in the importance of tasks and also explore the desirability of adopting a narrow business strategy.

  • Managerial overload and organization design
    Economics Letters, 2009
    Co-Authors: Yossi Spiegel
    Abstract:

    Abstract This paper considers a firm's choice between a “Divisional Structure” and a “functional Structure.” It shows that an increase in the number of projects which the firm can adopt creates a managerial overload, which favors the Divisional Structure.

  • A Double Moral Hazard Model of Organization Design
    SSRN Electronic Journal, 2007
    Co-Authors: Elazar Berkovitch, Ronen Israel, Yossi Spiegel
    Abstract:

    We develop a theory of organization design in which the firm's Structure is chosen to mitigate moral hazard problems in the selection and the implementation of projects. For a given set of projects, the Divisional Structure which gives each agent the full responsibility over a subset of projects is in general more efficient than the functional Structure under which projects are implemented by teams of agents, each of whom specializes in one task. However, the ex post efficiency of the Divisional Structure may encourage the firm's manager to select more expensive (but still profitable) projects ex ante. We examine how the tradeoff between the ex post inefficiency in the implementation of projects and the ex ante inefficiency in the selection of projects is affected by various factors like size, complexity, and asymmetry in the importance of tasks. We also explore the desirability of adopting a narrow business strategy and the implications of managerial work overload for organizational Structure.

Yongqin Wang - One of the best experts on this subject based on the ideXlab platform.

  • Incomplete contract, bargaining and optimal Divisional Structure
    Journal of Economics, 2011
    Co-Authors: Te Bao, Yongqin Wang
    Abstract:

    When complete contracting is not possible, allocating control Structure becomes the second-best arrangement. This paper analyzes the design of optimal Divisional Structure within an organization where ex post bargaining between the potential Divisional managers is possible. In much the same light as Aghion and Tirole (J Political Econ 105(1):1–29, 1997), we study the control problem in the context of search for projects. Our model shows that when the managers cannot bargain with one another, internal integration is preferred to internal separation. Where bargaining is possible, formal Divisional Structure defines both the ex post bargaining position of the two managers and their incentive to search ex ante. When the managers tend to arrive at a more favorable project to the principal via bargaining, the general leader of a firm may want to choose separation instead to increase the probability of bargaining, as the symmetrical incentive requires both managers to search and get informed.

  • Incomplete Contract and Divisional Structures
    2009
    Co-Authors: Te Bao, Yongqin Wang
    Abstract:

    In this paper we want to analyze the internal Divisional Structure within an organi- zation in the framework of incomplete contract theory. We use the framework of Aghion and Tirole (1997) and define the managerial control Structure as \sequence of search". A key feature of this paper which differentiate it from other works in the literature is that we add add an ex post bargaining phase in which the managers can agree on the project which maximize their joint private benefit. Our model shows the share of co- operative surplus the managers can get from bargaining and their default pay off plays a key role in determining their search effort. When there is no spill over effect between the agents' effort, internal separation is always dominated by internal integration with control right assigned to the agent (manager) with high interest congruence with the principal (head quarter). When there are synergy effect and setup cost during integra- tion, the principal need to consider the cost-benefit trade off as Riyanto (2000) suggests. But more importantly, the optimal Divisional Structure depends heavily on whether the bargaining is interest congruence enhancing (increase the interest congruence between agents and the principal) or destroying (decrease the interest congruence). JEL Classification: D23, L22 Key words: organizational form, Divisional Structure, incomplete contract, bargaining

  • Incomplete Contract. Bargaining and Divisional Structures
    SSRN Electronic Journal, 2009
    Co-Authors: Te Bao, Yongqin Wang
    Abstract:

    When complete contracting is not possible, allocating control Structure becomes the second-best arrangement. This paper analyzes the design of optimal Divisional Structure within an organization where ex post bargaining between the potential Divisional managers is possible. In much the same light as Aghion and Tirole (J Political Econ 105(1):1¨C29, 1997), we study the control problem in the context of search for projects. Our model shows that when the managers cannot bargain with one another, internal integration is preferred to internal separation. Where bargaining is possible, formal Divisional Structure defines both the ex post bargaining position of the two managers and their incentive to search ex ante. When the managers tend to arrive at a more favorable project to the principal via bargaining, the general leader of a firm may want to choose separation instead to increase the probability of bargaining, as the symmetrical incentive requires both managers to search and get informed.

  • Incomplete Contract and Divisional Structures
    2009
    Co-Authors: Te Bao, Yongqin Wang
    Abstract:

    In this paper we want to analyze the internal Divisional Structure within an organization in the framework of incomplete contract theory. We use the framework of Aghion and Tirole (1997) and define the managerial control Structure as “sequence of search”. A key feature of this paper which differentiate it from other works in the literature is that we add add an ex post bargaining phase in which the managers can agree on the project which maximize their joint private benefit. Our model shows the share of cooperative surplus the managers can get from bargaining and their default pay off plays a key role in determining their search effort. When there is no spill over effect between the agents’ effort, internal separation is always dominated by internal integration with control right assigned to the agent (manager) with high interest congruence with the principal (head quarter). When there are synergy effect and setup cost during integration, the principal need to consider the cost-benefit trade off as Riyanto (2000) suggests. But more importantly, the optimal Divisional Structure depends heavily on whether the bargaining is interest congruence enhancing (increase the interest congruence between agents and the principal) or destroying (decrease the interest congruence). JEL Classification: D23, L22

Elazar Berkovitch - One of the best experts on this subject based on the ideXlab platform.

  • A Double Moral Hazard Model of Organization Design
    Journal of Economics & Management Strategy, 2010
    Co-Authors: Elazar Berkovitch, Ronen Israel, Yossi Spiegel
    Abstract:

    We develop a theory of organization design in which the firm’s Structure is chosenbytradingoffexpostefficiencyintheimplementationofprojectsagainst ex ante efficiency in the selection of projects. Using our framework, we derive a novel set of empirical predictions regarding differences between firms with a functional Structure and firms with a Divisional Structure. We examine how the overall profitability of the two Structures is affected by various factors like size, complexity, and asymmetry in the importance of tasks and also explore the desirability of adopting a narrow business strategy.

  • A Double Moral Hazard Model of Organization Design
    SSRN Electronic Journal, 2007
    Co-Authors: Elazar Berkovitch, Ronen Israel, Yossi Spiegel
    Abstract:

    We develop a theory of organization design in which the firm's Structure is chosen to mitigate moral hazard problems in the selection and the implementation of projects. For a given set of projects, the Divisional Structure which gives each agent the full responsibility over a subset of projects is in general more efficient than the functional Structure under which projects are implemented by teams of agents, each of whom specializes in one task. However, the ex post efficiency of the Divisional Structure may encourage the firm's manager to select more expensive (but still profitable) projects ex ante. We examine how the tradeoff between the ex post inefficiency in the implementation of projects and the ex ante inefficiency in the selection of projects is affected by various factors like size, complexity, and asymmetry in the importance of tasks. We also explore the desirability of adopting a narrow business strategy and the implications of managerial work overload for organizational Structure.

Ahmed Riahibelkaoui - One of the best experts on this subject based on the ideXlab platform.

Ahmed Riahi-belkaoui - One of the best experts on this subject based on the ideXlab platform.