Business groups as knowledge-based hierarchies of firms
Bocconi University · London School of Economics and Political Science · +3 more institutions
Abstract
Abstract We provide the first worldwide overview of the patterns of hierarchical differentiation across Business Groups (BGs), highlighting the coexistence of different hierarchical shapes. We show how the different shapes can arise as optimal hierarchical structures in a knowledge-based model of BGs when subsidiaries’ operations involve problem-solving under parents’ supervision. The optimal choice of hierarchical structure is driven by production efficiency and two dimensions of problem-solving: efficiency related to supervising knowledge creation and handling associated communication across subsidiaries. We check the consistency of the model’s predictions with the empirical patterns. The model successfully…
Citation impact
- FWCI
- 0.00
- Percentile
- 98%
- References
- 0
Authors
4- CACarlo AltomonteCorresponding
Bocconi University
- GIGianmarco I.P. Ottaviano
Bocconi University, London School of Economics and Political Science
- ARArmando Rungi
IMT School for Advanced Studies Lucca
- TSTommaso Sonno
GNA University, Bocconi University, London School of Economics and Political Science, University of Bologna
Topics & keywords
- Consistency (knowledge bases)
- Subsidiary
- Hierarchical organization
- Computer science
- Cornerstone
- Hierarchical database model
- Multilevel model
- Process (computing)