Turbulence, Firm Decentralization, and Growth in Bad Times
Philippe Aghion
(1, 2, 3)
,
Nicholas Bloom
(4)
,
Brian Lucking
(4)
,
Raffaella Sadun
(5)
,
John van Reenen
(6)
Résumé
What is the optimal form of firm organization during "bad times"? The greater turbulence following macro shocks may benefit decentralized firms because the value of local information increases (the "localist" view). On the other hand, the need to make tough decisions may favor centralized firms (the "centralist" view). Using two large micro datasets on decentralization in firms in ten OECD countries (WMS) and US establishments (MOPS administrative data), we find that firms that delegated more power from the central headquarters to local plant managers prior to the Great Recession outperformed their centralized counterparts in sectors that were hardest hit by the subsequent crisis (as measured by export growth and product durability). Results based on measures of turbulence based on product churn and stock market volatility provide further support to the localist view. This conclusion is robust to alternative explanations such as managerial fears of bankruptcy and changing coordination costs. Although decentralization will be suboptimal in many environments, it does appear to be beneficial for the average firm during bad times.
Domaines
Economies et financesFormat du dépôt | Notice |
---|---|
Type de dépôt | Article dans une revue |
Titre |
en
Turbulence, Firm Decentralization, and Growth in Bad Times
|
Résumé |
en
What is the optimal form of firm organization during "bad times"? The greater turbulence following macro shocks may benefit decentralized firms because the value of local information increases (the "localist" view). On the other hand, the need to make tough decisions may favor centralized firms (the "centralist" view). Using two large micro datasets on decentralization in firms in ten OECD countries (WMS) and US establishments (MOPS administrative data), we find that firms that delegated more power from the central headquarters to local plant managers prior to the Great Recession outperformed their centralized counterparts in sectors that were hardest hit by the subsequent crisis (as measured by export growth and product durability). Results based on measures of turbulence based on product churn and stock market volatility provide further support to the localist view. This conclusion is robust to alternative explanations such as managerial fears of bankruptcy and changing coordination costs. Although decentralization will be suboptimal in many environments, it does appear to be beneficial for the average firm during bad times.
|
Auteur(s) |
Philippe Aghion
1, 2, 3
, Nicholas Bloom
4
, Brian Lucking
4
, Raffaella Sadun
5
, John van Reenen
6
1
PSE -
Paris School of Economics
( 301309 )
- 48 boulevard Jourdan 75014 Paris
- France
2
PJSE -
Paris Jourdan Sciences Economiques
( 578027 )
- 48 boulevard Jourdan 75014 Paris
- France
3
Collège de France - Chaire Economie des institutions, de l'innovation et de la croissance
( 1043633 )
- 11 place Marcelin Berthelot F-75231 Paris Cedex 05
- France
4
Stanford University
( 73500 )
- 450 Serra Mall, Stanford, CA 94305-2004
- États-Unis
5
Harvard Business School
( 486577 )
- Soldiers Field Park Boston MA 02163 USA
- États-Unis
6
LSE -
London School of Economics and Political Science
( 328453 )
- Houghton Street, London WC2A 2AE
- Royaume-Uni
|
Langue du document |
Anglais
|
Nom de la revue |
|
Vulgarisation |
Non
|
Comité de lecture |
Oui
|
Audience |
Internationale
|
Date de publication |
2021-01
|
Volume |
13
|
Numéro |
1
|
Page/Identifiant |
133-169
|
Public visé |
Scientifique
|
Domaine(s) |
|
Mots-clés (JEL) |
|
DOI | 10.1257/app.20180752 |
UT key WOS | 000604439700005 |
Loading...