The Flattening Firm and Product Market Competition: The Effect of Trade Liberalization / Maria Guadalupe, Julie Wulf.

Format:

Book

Author/Creator:

Guadalupe, Maria.

Contributor:

National Bureau of Economic Research.

Wulf, Julie.

Series:

Working Paper Series (National Bureau of Economic Research) no. w14491.

NBER working paper series no. w14491

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

The Flattening Firm and Product Market Competition

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2008.

Summary:

This paper establishes a causal effect of competition from trade liberalization on various characteristics of organizational design. We exploit a unique panel dataset on firm hierarchies (1986-1999) of large U.S. firms and find that increasing competition leads firms to become flatter, i.e., (i) reduce the number of positions between the CEO and division managers (DM), (ii) increase the number of positions reporting directly to the CEO (span of control), (iii) increase DM total and performance-based pay. The results are generally consistent with the explanation that firms redesign their organizations through a set of complementary choices in response to changes in their environment.

Notes:

Print version record

November 2008.