Organizational Form, the Business Environment, and Competitive Strategy
34 Pages Posted: 31 Jan 2008
Date Written: September 2007
Abstract
This paper uses a principal-agent model to investigate how the business environment affects the decision to delegate or centralize project selection authority. Delegation is optimal when the level of competition is low, economic conditions are moderately, but not extremely, favorable, and good and bad projects are relatively dissimilar. Delegating firms also compete more aggressively, suggesting a link between strategy and structure. Finally, there is an inverse U-shaped relationship between the number of competitors for a project and the value realized by the project's sponsor, implying that competition among counterparties in the "value net" does not always benefit the focal enterprise.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Relationship Lending and Lines of Credit in Small Firm Finance
By Allen N. Berger and Gregory F. Udell
-
Lines of Credit and Relationship Lending in Small Firm Finance
By Allen N. Berger and Gregory F. Udell
-
Information Production and Capital Allocation: Decentralized vs. Hierarchical Firms
-
Information Production and Capital Allocation: Decentralized vs. Hierarchical Firms
-
Does Distance Still Matter? The Information Revolution in Small Business Lending
-
Does Distance Still Matter? The Information Revolution in Small Business Lending
-
By Allen N. Berger, Philip E. Strahan, ...
-
By Allen N. Berger, Nathan Miller, ...
-
By Allen N. Berger, Nathan Miller, ...
-
By Allen N. Berger and Gregory F. Udell