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Delegation in Multi‐Establishment Firms: Evidence from I.T. Purchasing

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  • Kristina McElheran
Abstract
Recent contributions to a growing theory literature have focused on the tradeoff between adaptation and coordination in determining delegation within firms. Empirical evidence, however, is limited. Using establishment‐level data on decision rights over information technology investments, I find that a high net value of adaptation is strongly associated with delegation, as are local information advantages and firm‐wide diversification; in contrast, a high net value of within‐firm coordination is correlated with centralization. Variation across establishments within firms is widespread: most firms are neither fully centralized nor fully decentralized. Delegation patterns are largely consistent with standard team‐theory predictions; however, certain findings, such as a negative correlation between delegation and firm size, call for a consideration of agency costs as well.

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  • Kristina McElheran, 2014. "Delegation in Multi‐Establishment Firms: Evidence from I.T. Purchasing," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(2), pages 225-258, June.
    • Handle: RePEc:bla:jemstr:v:23:y:2014:i:2:p:225-258
    DOI: 10.1111/jems.12054
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    3. Nikolas Zolas & Zachary Kroff & Erik Brynjolfsson & Kristina McElheran & David N. Beede & Cathy Buffington & Nathan Goldschlag & Lucia Foster & Emin Dinlersoz, 2020. "Advanced Technologies Adoption and Use by U.S. Firms: Evidence from the Annual Business Survey," NBER Working Papers 28290, National Bureau of Economic Research, Inc.
    4. Daniel Habermacher, 2022. "Authority and Specialization under Informational Interdependence," Working Papers 142, Red Nacional de Investigadores en Economía (RedNIE).
    5. Tobias Stucki & Daniel Wochner, 2019. "Technological and organizational capital: Where complementarities exist," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(3), pages 458-487, June.
    6. Gerten, Elisa & Beckmann, Michael & Kräkel, Matthias, 2022. "Information and Communication Technology, Hierarchy, and Job Design," IZA Discussion Papers 15491, Institute of Labor Economics (IZA).
    7. Francisco Brahm & Jorge Tarziján, 2016. "Toward an integrated theory of the firm: The interplay between internal organization and vertical integration," Strategic Management Journal, Wiley Blackwell, vol. 37(12), pages 2481-2502, December.
    8. Anna Gumpert & Henrike Steimer & Manfred Antoni, 2022. "Firm Organization with Multiple Establishments [“Organizing Offshoring: Middle Managers and Communication Costs]," The Quarterly Journal of Economics, Oxford University Press, vol. 137(2), pages 1091-1138.
    9. Asuyama, Yoko, 2016. "Delegation to workers across countries and industries : social capital and coordination needs matter," IDE Discussion Papers 620, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    10. Burguet, Roberto & Sákovics, József, 2019. "Personalized prices and uncertainty in monopsony," International Journal of Industrial Organization, Elsevier, vol. 67(C).
    11. Catherine Buffington & Lucia Foster & Ron Jarmin & Scott Ohlmacher, 2016. "The Management and Organizational Practices Survey (MOPS): An Overview," Working Papers 16-28, Center for Economic Studies, U.S. Census Bureau.
    12. Bel, By Roland & Smirnov, Vladimir & Wait, Andrew, 2018. "Managing change: Communication, managerial style and change in organizations," Economic Modelling, Elsevier, vol. 69(C), pages 1-12.
    13. Anna Gumpert & Henrike Steimer & Manfred Antoni, 2023. "Firm Organization with Multiple Establishments," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 137(2), pages 1091-1138.
    14. Asuyama, Yoko, 2020. "Delegation to workers across countries and industries: Interacting effects of social capital and coordination needs," International Journal of Industrial Organization, Elsevier, vol. 69(C).
    15. Erik Brynjolfsson & Kristina McElheran, 2016. "Data in Action: Data-Driven Decision Making in U.S. Manufacturing," Working Papers 16-06, Center for Economic Studies, U.S. Census Bureau.
    16. Katayama, Hajime & Meagher, Kieron J. & Wait, Andrew, 2018. "Authority and communication in firms," Journal of Economic Behavior & Organization, Elsevier, vol. 155(C), pages 315-348.

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