Abstract.
A model is analyzed in which agents exert effort to create innovations within an organization. When payments are infeasible, the decision on the implementation of a proposal is shown to be made by simple monotonic decision rules. Organizational structure is then determined by a collection of decision rules. A trade-off arises between the use of information and the incentives created by a rule. If the former dominates it will currently be optimal to install a hierarchy. Otherwise decentralization by granting autonomy to innovators may be better. Requiring unanimous decision-making is optimal if a strong filtering of proposals is necessary.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Author information
Authors and Affiliations
Corresponding author
Additional information
Received: June 2001, Accepted: May 2002,
JEL Classification:
D23, D71, L22
I am grateful to Anke Kessler, Matthias Kräkel, Sabine Lindenthal, Patrick Schmitz, Urs Schweizer and Thomas Tröger as well as two anonymous referees for helpful comments and discussions. I am especially grateful to one anonymous referee who made numerous extremely useful suggestions.
Rights and permissions
About this article
Cite this article
Sliwka, D. Organizational structure and innovative activity. Economics of Governance 4, 187–214 (2003). https://doi.org/10.1007/s10101-002-0054-y
Issue Date:
DOI: https://doi.org/10.1007/s10101-002-0054-y