Technology, Information and the Decentralization of the Firm
Author | : Daron Acemoglu |
Publisher | : |
Total Pages | : 0 |
Release | : 2006 |
ISBN-10 | : OCLC:1025261420 |
ISBN-13 | : |
Rating | : 4/5 ( Downloads) |
Download or read book Technology, Information and the Decentralization of the Firm written by Daron Acemoglu and published by . This book was released on 2006 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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. 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 favor 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.