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Competition, collaboration and organization design

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  • 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
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