Organizing for Synergies A Theory of Hybrid Organizations文档.pdf

Organizing for Synergies: A Theory of Hybrid Organizations Wouter Dessein, Luis Garicano, and Robert Gertner∗ Graduate School of Business The University of Chicago February 2008 Abstract Large companies are generally organized into business units, yet some functions are centralized and integrated in order to identify and implement standardization opportu- nities. But this requires placing a functional manager in charge of relevant activities, thereby limiting business-unit managers’ authority. Integration then requires muting effort incentives to align decision-making and improve communication and leads to exces- sive standardization. Integration may reduce surplus if motivating managers is important. Giving business-unit managers control over standardization allows high-powered incen- tives but limits synergy implementation. Providing high-powered incentives and letting managers bargain over standardization does not restore efficiency; bargaining and au- thority with incentive alignment are substitutes. Keywords: communication, coordination, incentives, incomplete contracts, merger imple- mentation, organizational design, scope of the fi rm, task allocation. JEL Classifi cations: D2, D8, L2. ∗We thank Bob Gibbons, John Levin, Ilya Segal, Michael Whinston, three anonymous referees, and participants in seminars at Cambridge, Columbia, Duke, Duke/Northwestern/Texas IO Theory Conference, ECARES, Gerzensee, Harvard/MIT Organizational Economics, INSEAD, London School of Economics, North- western, Oxford, Purdue, UC San Diego, Stanford Institute for Theoretical Economics, Un