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Firm hierarchy and the market for knowledge

Author

Listed:
  • Fabio Pieri
  • Massimiliano Vatiero

Abstract

This paper investigates the role of the market for knowledge in shaping firm hierarchy—that is, the span of control and the number of layers. We predict that, the larger the extent of the market for knowledge, the larger the span of control and the fewer the layers. We test our predictions using a rich database representing industrial firms in Italy during 2005-2018. Our identification strategy is based on existing cross-regional and cross-industry heterogeneity within the extent of the market for business services’ providers and instrumental variables. Results confirm that firms are flatter as the regional market for knowledge expands.

Suggested Citation

  • Fabio Pieri & Massimiliano Vatiero, "undated". "Firm hierarchy and the market for knowledge," Development Working Papers 482, Centro Studi Luca d'Agliano, University of Milano.
    • Handle: RePEc:csl:devewp:482
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    More about this item

    Keywords

    firm hierarchy; number of layers; span of control; market for knowledge;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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