IDEAS home Printed from https://ideas.repec.org/p/sfu/sfudps/dp00-16.html
   My bibliography  Save this paper

The Ultimate Control Group

Author

Abstract

Empirical research on the organization of firms requires that firms be classified on the basis of their control structures. This should be done in a way that can potentially be made operational. It is easy to identify the ultimate controller of a hierarchical organization, and the literature has largely focused on this case. But many organizational structures mix hierarchy with collective choice procedures such as voting, or use circular structures under which superiors are accountable to their subordinates. I develop some analytic machinery that can be used to map the authority structures of such organizations, and show that under mild restrictions there is a well-defined ultimate control group. The results are consistent with common intuitions about the nature of control in some familiar economic settings.

Suggested Citation

  • Gregory K. Dow, 2000. "The Ultimate Control Group," Discussion Papers dp00-16, Department of Economics, Simon Fraser University, revised Aug 2000.
    • Handle: RePEc:sfu:sfudps:dp00-16
    as

    Download full text from publisher

    File URL: http://www.sfu.ca/repec-econ/sfu/sfudps/dp00-16.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Hart, Oliver & Moore, John, 1990. "Property Rights and the Nature of the Firm," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1119-1158, December.
    2. Sah, Raaj Kumar & Stiglitz, Joseph E, 1986. "The Architecture of Economic Systems: Hierarchies and Polyarchies," American Economic Review, American Economic Association, vol. 76(4), pages 716-727, September.
    3. Katzner, Donald W., 1992. "The structure of authority in the firm," Journal of Economic Behavior & Organization, Elsevier, vol. 19(1), pages 41-67, September.
    4. Bowles, Samuel, 1985. "The Production Process in a Competitive Economy: Walrasian, Neo-Hobbesian, and Marxian Models," American Economic Review, American Economic Association, vol. 75(1), pages 16-36, March.
    5. repec:ner:ucllon:http://discovery.ucl.ac.uk/17678/ is not listed on IDEAS
    6. Dow, Gregory K. & Putterman, Louis, 2000. "Why capital suppliers (usually) hire workers: what we know and what we need to know," Journal of Economic Behavior & Organization, Elsevier, vol. 43(3), pages 319-336, November.
    7. Dow, Gregory K., 2000. "On the Neutrality of Asset Ownership for Work Incentives," Journal of Comparative Economics, Elsevier, vol. 28(3), pages 581-605, September.
    8. Raaj Kumar Sah, 1991. "Fallibility in Human Organizations and Political Systems," Journal of Economic Perspectives, American Economic Association, vol. 5(2), pages 67-88, Spring.
    9. 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.
    10. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    11. Yingyi Qian, 1994. "Incentives and Loss of Control in an Optimal Hierarchy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(3), pages 527-544.
    12. Gregory Dow, 2001. "Allocating Control over Firms: Stock Markets versus Membership Markets," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 18(2), pages 201-218, March.
    13. Bowles, Samuel & Gintis, Herbert, 1993. "A Political and Economic Case for the Democratic Enterprise," Economics and Philosophy, Cambridge University Press, vol. 9(1), pages 75-100, April.
    14. Baker, George & Gibbons, Robert & Murphy, Kevin J, 1999. "Informal Authority in Organizations," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 56-73, April.
    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. Alper Duman, 2009. "Comparative Analysis of Organizational Forms in the Software Industry and Legal Services," Working Papers 0903, Izmir University of Economics.
    2. Avner Ben-Ner & Matthew Ellman, 2013. "The contributions of behavioural economics to understanding and advancing the sustainability of worker cooperatives," Journal of Entrepreneurial and Organizational Diversity, European Research Institute on Cooperative and Social Enterprises, vol. 2(1), pages 75-100, August.
    3. Dow,Gregory K., 2019. "The Labor-Managed Firm," Cambridge Books, Cambridge University Press, number 9781107589650, 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. Dow,Gregory K., 2019. "The Labor-Managed Firm," Cambridge Books, Cambridge University Press, number 9781107589650, September.
    2. Gregory K. DOW, 2018. "The Theory Of The Labor-Managed Firm: Past, Present, And Future," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(1), pages 65-86, March.
    3. Jeremy C. Stein, 2002. "Information Production and Capital Allocation: Decentralized versus Hierarchical Firms," Journal of Finance, American Finance Association, vol. 57(5), pages 1891-1921, October.
    4. Jeremy C. Stein, 2000. "Information Production and Capital Allocation: Decentralized vs. Hierarchical Firms," NBER Working Papers 7705, National Bureau of Economic Research, Inc.
    5. Bernard Baudry & Bruno Tinel, 2003. "Une analyse théorique des fondements et du fonctionnement de la relation d'autorité intrafirme," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00270902, HAL.
    6. Esteves, Luiz A., 2014. "A Economia das Firmas Cooperadas e a Análise Antitruste [The Economics of Cooperative Firms and the Antitrust Analysis]," MPRA Paper 58908, University Library of Munich, Germany.
    7. repec:bla:annpce:v:89:y:2018:i:1:p:65-86 is not listed on IDEAS
    8. Cecilia Navarra & Ermanno Tortia, 2014. "Employer Moral Hazard, Wage Rigidity, and Worker Cooperatives: A Theoretical Appraisal," Journal of Economic Issues, Taylor & Francis Journals, vol. 48(3), pages 707-726.
    9. M. Idriss GHODBANE, 2002. "Centralization Versus Decentralization in Credit Lending," LIDAM Discussion Papers IRES 2002002, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    10. Daron Acemoglu & Philippe Aghion & Claire Lelarge & John Van Reenen & Fabrizio Zilibotti, 2007. "Technology, Information, and the Decentralization of the Firm," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(4), pages 1759-1799.
    11. Dalia Marin & Thierry Verdier, 2008. "Power Inside The Firm and The Market: A General Equilibrium Approach," Journal of the European Economic Association, MIT Press, vol. 6(4), pages 752-788, June.
    12. Ernst Fehr & Holger Herz & Tom Wilkening, 2013. "The Lure of Authority: Motivation and Incentive Effects of Power," American Economic Review, American Economic Association, vol. 103(4), pages 1325-1359, June.
    13. Nicholas Bloom & Raffaella Sadun, 2012. "The Organization of Firms Across Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(4), pages 1663-1705.
    14. Choe, Chongwoo & Ishiguro, Shingo, 2008. "On the (Sub)optimality of Multi-tier Hierarchies: Coordination versus Motivation," MPRA Paper 13451, University Library of Munich, Germany.
    15. 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.
    16. Patrick HERBST & Jens PRUFER, 2016. "Firms, Nonprofits, And Cooperatives: A Theory Of Organizational Choice," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 87(3), pages 315-343, December.
    17. Takashi Shimizu, 2017. "Cheap talk with an exit option: a model of exit and voice," International Journal of Game Theory, Springer;Game Theory Society, vol. 46(4), pages 1071-1088, November.
    18. Deffains, Bruno & Demougin, Dominique M., 2006. "Governance: Who controls matters," SFB 649 Discussion Papers 2006-053, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    19. Brice Corgnet, 2018. "Rac(g)e Against the Machine? Social Incentives When Humans Meet Robots," Post-Print halshs-01984467, HAL.
    20. Stefano Dughera, 2020. "Skills, preferences and rights: evolutionary complementarities in labor organization," Journal of Evolutionary Economics, Springer, vol. 30(3), pages 843-866, July.
    21. Helmut Bester, 2009. "Externalities, communication and the allocation of decision rights," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 41(2), pages 269-296, November.

    More about this item

    Statistics

    Access and download statistics

    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:sfu:sfudps:dp00-16. 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: Working Paper Coordinator (email available below). General contact details of provider: https://edirc.repec.org/data/desfuca.html .

    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.