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Kouroche Vafaï
''Optimal Organization''
( 2012, Vol. 32 No.1 )
A contract-based model of the endogenous determination of an organization's architecture is considered where a principal has the choice between a two- and a three-level organization. Each organizational architecture is plagued with its own specific form(s) of opportunism. We derive the conditions under which opportunism in a three-level hierarchy becomes so severe as to make this architecture strictly outperformed by a two-level organization.
JEL: L2 - Firm Objectives, Organization, and Behavior: General
D2 - Production and Organizations: General
Manuscript Received : Oct 17 2011 Manuscript Accepted : Feb 06 2012

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