We offer a model that combines a knowledge based organizational structure with progressive learning of employees’ talent. We show that higher span of control is associated with better selected managers, higher wages, higher probability to be promoted, and higher turn-over in the early career...

Agents who work in teams may be better informed about each other's effort than the employer. We analyse how the possibility for employees to write contracts on this information alters the incentives provided by the principal. We show that side-contracting is profitable for the employer when...

This paper proposes a theory of how employee-driven innovations are developed. An employee with private information about the value of his idea can create a spin-out, work in a division of the parent firm, or work for a spinoff of the parent firm. Developing an idea in a spinoff allows the...

The paper develops a model where the structure of organizations is a choice variable for firms and depends on conditions in the labour market. It shows that an increase in the supply of skilled labour may lead firms to adopt organizations with less hierarchical levels. This organizational change...