Business, Management and Accounting
4 years ago

Optimal delegation of authority boosts efficiency and decision-making in corporations.

RePEc: Research Papers in Economics
Delegated Contracting and Corporate Hierarchies
Chongwoo Choe

Paper Summary

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The article discusses how delegating authority in a company's hierarchy can be beneficial. It compares two types of hierarchies: one where the boss makes all decisions, and one where the boss delegates some decisions to a manager. Delegating authority to the manager can lead to better decision-making and more efficient work. This happens because the manager can gather important information and use it to motivate workers. Overall, delegating authority can result in more benefits for the company compared to centralizing all decisions.