Efficient coordination in large groups is a fundamental issue in economic organizations. We consider the weak-link game with the feature of economies of scale that is necessary for voluntary group growth, in a minimal setup with exit and merger options that allows for bi-directional changes in...

Purpose – The purpose of this paper is to investigate the optimal allocation of authority within “chain” organizations and to show when partial centralization becomes dominant in the sense of organizational performance. Design/methodology/approach – This paper takes an incomplete...

This paper uses a mechanism design without transfer approach to investigate the optimal communication mechanism in a two-division organization. The principal, with perfect commitment power on multiple decision rules, wants decisions to be both adapted to local conditions and coordinated with...