Munich Personal RePEc Archive

Information transmitted within the firm and the internal organization of the firm

Alonso-Pauli, Eduard and Bru, Lluís (2019): Information transmitted within the firm and the internal organization of the firm.

This is the latest version of this item.

[img] PDF
MPRA_paper_97118.pdf

Download (193kB)

Abstract

We investigate the incentives sales managers have to transmit information on demand conditions to headquarters under different organizational structures, and its subsequent impact on firm performance. When headquarters chooses quantities, their interests are aligned and reliable information is transmitted. When the choice of quantities is delegated to the sales manager, instead, he prefers not to transmit reliable information and as a consequence, headquarters set transfer prices having poor information about demand. We then see that, due to this difference in the quality of the information available to headquarters, the centralized organization frequently has the best performance.

Available Versions of this Item

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.