IDEAS home Printed from https://ideas.repec.org/a/eee/jeborg/v183y2021icp1-18.html
   My bibliography  Save this article

Competition, collaboration and organization design

Author

Listed:
  • Prasad, Suraj
  • Tanase, Sebastian

Abstract

We look at the tradeoff between competition and collaboration, and its implications for organization design – in the sense of structure, culture (or shared preferences) and monetary incentives. In our setting, collaboration is essential but costly for agents with different preferences. We consider two structures: an internally competitive (or parallel) structure where agents compete on quality for their projects to be selected by a principal, and an internally noncompetitive (or focussed) structure where the principal mandates a project. As preferences diverge, internal competition leads to higher quality projects, until the need to compromise to facilitate collaboration undoes these gains. As a result, internal competition is most beneficial for the organization for intermediate levels of heterogeneity in preferences.

Suggested Citation

  • Prasad, Suraj & Tanase, Sebastian, 2021. "Competition, collaboration and organization design," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 1-18.
    • Handle: RePEc:eee:jeborg:v:183:y:2021:i:c:p:1-18
    DOI: 10.1016/j.jebo.2020.12.010
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167268120304698
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jebo.2020.12.010?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
    2. Yeon-Koo Che & Navin Kartik, 2009. "Opinions as Incentives," Journal of Political Economy, University of Chicago Press, vol. 117(5), pages 815-860, October.
    3. Eric Van den Steen, 2010. "Culture Clash: The Costs and Benefits of Homogeneity," Management Science, INFORMS, vol. 56(10), pages 1718-1738, October.
    4. repec:ner:ucllon:http://discovery.ucl.ac.uk/17678/ is not listed on IDEAS
    5. Alessandro Bonatti & Heikki Rantakari, 2016. "The Politics of Compromise," American Economic Review, American Economic Association, vol. 106(2), pages 229-259, February.
    6. Prat, Andrea, 2002. "Should a team be homogeneous?," European Economic Review, Elsevier, vol. 46(7), pages 1187-1207, July.
    7. Raghuram G. Rajan & Luigi Zingales, 1998. "Power in a Theory of the Firm," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(2), pages 387-432.
    8. Alexander V. Hirsch & Kenneth W. Shotts, 2015. "Competitive Policy Development," American Economic Review, American Economic Association, vol. 105(4), pages 1646-1664, April.
    9. Mathias Dewatripont & Jean Tirole, 2005. "Modes of Communication," Journal of Political Economy, University of Chicago Press, vol. 113(6), pages 1217-1238, December.
    10. Aghion, Philippe & Tirole, Jean, 1997. "Formal and Real Authority in Organizations," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 1-29, February.
    11. Suraj Prasad & Marcus Tomaino, 2020. "Resources and culture in organizations," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(4), pages 854-872, October.
    12. Barry J. Nalebuff & Joseph E. Stiglitz, 1983. "Prices and Incentives: Towards a General Theory of Compensation and Competition," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 21-43, Spring.
    13. Guido Friebel & Michael Raith, 2010. "Resource Allocation and Organizational Form," American Economic Journal: Microeconomics, American Economic Association, vol. 2(2), pages 1-33, May.
    14. Itoh, Hideshi, 1991. "Incentives to Help in Multi-agent Situations," Econometrica, Econometric Society, vol. 59(3), pages 611-636, May.
    15. Augustin Landier & David Sraer & David Thesmar, 2009. "Optimal Dissent in Organizations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(2), pages 761-794.
    16. Anthony M. Marino & Ján Zábojník, 2004. "Internal Competition for Corporate Resources and Incentives in Teams," RAND Journal of Economics, The RAND Corporation, vol. 35(4), pages 710-727, Winter.
    17. Carrillo, Juan D. & Gromb, Denis, 1999. "On the strength of corporate cultures," European Economic Review, Elsevier, vol. 43(4-6), pages 1021-1037, April.
    18. Lazear, Edward P, 1989. "Pay Equality and Industrial Politics," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 561-580, June.
    19. Steven Callande & Bård Harstad, 2015. "Experimentation in Federal Systems," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 130(2), pages 951-1002.
    20. David Thesmar, 2009. "Optimal dissent and risk Management within organizations," Post-Print hal-00495931, HAL.
    21. Eric Van den Steen, 2010. "On the origin of shared beliefs (and corporate culture)," RAND Journal of Economics, RAND Corporation, vol. 41(4), pages 617-648, December.
    22. Heikki Rantakari, 0. "Managerial Influence and Organizational Performance," Journal of the European Economic Association, European Economic Association, vol. 19(2), pages 1116-1161.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Suraj Prasad & Marcus Tomaino, 2020. "Resources and culture in organizations," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(4), pages 854-872, October.
    2. Suraj Prasad & Yasunari Tamada, 2024. "Mediating Internal Competition for Resources," Journal of Industrial Economics, Wiley Blackwell, vol. 72(1), pages 157-192, March.
    3. Hideshi Itoh & Kimiyuki Morita, 2023. "Information Acquisition, Decision Making, and Implementation in Organizations," Management Science, INFORMS, vol. 69(1), pages 446-463, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Suraj Prasad & Marcus Tomaino, 2020. "Resources and culture in organizations," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(4), pages 854-872, October.
    2. repec:eee:labchp:v:3:y:1999:i:pb:p:2373-2437 is not listed on IDEAS
    3. Safarzynska, Karolina & van den Bergh, Jeroen C.J.M., 2010. "Evolving power and environmental policy: Explaining institutional change with group selection," Ecological Economics, Elsevier, vol. 69(4), pages 743-752, February.
    4. Fleckinger, Pierre, 2012. "Correlation and relative performance evaluation," Journal of Economic Theory, Elsevier, vol. 147(1), pages 93-117.
    5. Jason G. Cummins & Ingmar Nyman, 2013. "Yes Men in Tournaments," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 169(4), pages 621-659, December.
    6. Eric Van den Steen, 2010. "Culture Clash: The Costs and Benefits of Homogeneity," Management Science, INFORMS, vol. 56(10), pages 1718-1738, October.
    7. Hideshi Itoh & Kimiyuki Morita, 2023. "Information Acquisition, Decision Making, and Implementation in Organizations," Management Science, INFORMS, vol. 69(1), pages 446-463, January.
    8. Xie, Yinxi & Xie, Yang, 2017. "Machiavellian experimentation," Journal of Comparative Economics, Elsevier, vol. 45(4), pages 685-711.
    9. Danilov, Anastasia & Harbring, Christine & Irlenbusch, Bernd, 2014. "Helping in Teams," IZA Discussion Papers 8707, Institute of Labor Economics (IZA).
    10. Ekinci, Emre & Theodoropoulos, Nikolaos, 2021. "Disagreement and informal delegation in organizations," International Journal of Industrial Organization, Elsevier, vol. 74(C).
    11. Pierre Fleckinger, 2007. "On Multiagent Moral Hazard under Technological Uncertainty," Working Papers hal-00240716, HAL.
    12. Bingley, P. & Eriksson, T, 2001. "Pay Spread and Skewness. Employee Effort and Firm Productivity," Papers 01-2, Aarhus School of Business - Department of Economics.
    13. Nana Adrian & Marc Möller, 2020. "Self‐managed work teams: An efficiency‐rationale for pay compression," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(2), pages 315-334, April.
    14. William Chan & Priscilla Man, 2012. "Help and Factionalism in Politics and Organizations," Southern Economic Journal, John Wiley & Sons, vol. 79(1), pages 144-160, July.
    15. Omiya, Shungo & Tamada, Yasunari & Tsai, Tsung-Sheng, 2017. "Optimal delegation with self-interested agents and information acquisition," Journal of Economic Behavior & Organization, Elsevier, vol. 137(C), pages 54-71.
    16. Anja Schöttner & Veikko Thiele, 2010. "Promotion Tournaments and Individual Performance Pay," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(3), pages 699-731, September.
    17. Shuo Liu & Dimitri Migrow, 2019. "Designing organizations in volatile markets," ECON - Working Papers 319, Department of Economics - University of Zurich.
    18. Luis Garicano & Richard A. Posner, 2005. "Intelligence Failures: An Organizational Economics Perspective," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 151-170, Fall.
    19. Tor Eriksson & Sabrina Teyssier & Marie‐Claire Villeval, 2009. "Self‐Selection And The Efficiency Of Tournaments," Economic Inquiry, Western Economic Association International, vol. 47(3), pages 530-548, July.
    20. Hiller, Victor & Verdier, Thierry, 2014. "Corporate culture and identity investment in an industry equilibrium," Journal of Economic Behavior & Organization, Elsevier, vol. 103(C), pages 93-112.
    21. Münster, Johannes, 2006. "Selection Tournaments, Sabotage, and Participation," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 118, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:183:y:2021:i:c:p:1-18. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jebo .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.