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Technology, information and the decentralization of the firm

Acemoglu, D.; Aghion, P.; Lelarge, C.; Van Reenen, J.; Zilibotti, F.; (2006) Technology, information and the decentralization of the firm. (NBER Working Papers 12206). National Bureau of Economic Research: Cambridge, US. Green open access

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Abstract

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.

Type: Working / discussion paper
Title: Technology, information and the decentralization of the firm
Open access status: An open access version is available from UCL Discovery
Publisher version: http://www.nber.org/papers/w12206
Language: English
Additional information: Please see http://eprints.ucl.ac.uk/17721/ for a version published in the Quarterly Journal of Economics
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of SandHS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/17767
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