Skip to main content

Please enter a keyword and click the arrow to search the site

The impact of complexity and managerial diseconomies on hierarchical governance

Journal

Journal of Economic Behavior and Organization

Subject

Strategy and Entrepreneurship

Authors / Editors

Brahm F;Tarzijan J

Biographies

Publication Year

2012

Abstract

Based on data from Chilean construction projects, we evaluate how the boundary choice of a focal activity is affected by the number of activities integrated elsewhere in a project and by the level of “between complexity” and “within complexity” of those activities. Our results show that managerial diseconomies of scale, which arise when contractors integrate more activities, and the different types of complexity, affect the relative advantages of hierarchical governance. In a novel result, we also show that interactions between the number of integrated activities and the types of complexity affect the relative merits of hierarchical governance to handle an activity, meaning that complexity and the extent of a project's integration are systematically intertwined in the explanation of boundary choices. Our findings indicate a need for research on interdependencies between different boundary choices and suggest that the evaluation of these interdependencies should consider the complexity of activities.

Keywords

Firm boundaries; Complexity; Managerial diseconomies; Make or buy

Available on ECCH

No


Select up to 4 programmes to compare

Select one more to compare
×
subscribe_image_desktop 5949B9BFE33243D782D1C7A17E3345D0

Sign up to receive our latest news and business thinking direct to your inbox

×

Sign up to receive our latest course information and business thinking

Leave your details above if you would like to receive emails containing the latest thought leadership, invitations to events and news about courses that could enhance your career. If you would prefer not to receive our emails, you can still access the case study by clicking the button below. You can opt-out of receiving our emails at any time by visiting: https://london.edu/my-profile-preferences or by unsubscribing through the link provided in our emails. View our Privacy Policy for more information on your rights.