Hierarchical Control and Optimum Firm Size.¶
Williamson, O. E. (1967). Hierarchical Control and Optimum Firm Size. Journal of Political Economy, 75(2), 123-138.
Cited by¶
2 citations across 2 artifacts.
Each citation links to the sentence it supports in the citing article.
Primes¶
- Diseconomies of Scale
- Economics / firms: beyond minimum-efficient scale, bureaucracy, communication overhead, and managerial distance raise long-run average cost per unit, producing the rising arm of the U-shaped cost curve.
This sourceClassic analysis of diseconomies of scale: managerial coordination loss, communication-channel attenuation, and loss-of-control frictions place an upper bound on the range of scale over which decreasing average cost continues. Foundational for the U-shaped long-run average-cost curve and the theory of optimum firm size.
Supported in partVerified against the publisher's abstract
The paper's abstract attributes diminishing returns to scale to hierarchical decision-making distortion, supporting the mechanism half of the claim but not its cost-curve or minimum-efficient-scale wording.
“There is a great deal of evidence that almost all organizational structures tend to produce false images in the decision-maker, and that the larger and more authoritarian the organization, the better the chance that its top decision-makers will be operating in purely imaginary worlds. This perhaps is the most fundamental reason for supposing that there are ultimately diminishing returns to scale.”
- Economics / firms: beyond minimum-efficient scale, bureaucracy, communication overhead, and managerial distance raise long-run average cost per unit, producing the rising arm of the U-shaped cost curve.
- Economies of Scale
- The classic analytical treatment of the diseconomies side is Oliver Williamson's 1967 paper Hierarchical Control and Optimum Firm Size,
This sourceClassic analysis of diseconomies of scale: managerial control loss and communication-channel attenuation through successive hierarchical layers place an upper bound on the scale range over which decreasing average cost continues; foundational for the U-shaped long-run average-cost curve and optimum firm size; supports the inline claim attributing the diseconomies upper-bound to Williamson.
- The classic analytical treatment of the diseconomies side is Oliver Williamson's 1967 paper Hierarchical Control and Optimum Firm Size,
Verification¶
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