Knowledge Hierarchies Flashcards
Hierarchies and the Organization of Knowledge in Production
- Knowledge-based hierarchy: the organization decides who learns
what and whom each worker should ask to deal with an unknown
problem. - Communication: workers acquire only the most relevant knowledge
and, when confronted with a problem they cannot solve, ask someone
else
A Model of Communication and Knowledge Acquisition in Production 1
- A worker operating a machine confronts a range of problems that must
be solved to produce
- Assumption: there is a set of possible problems and a set of knowledge
to solve some of these problems. Also, workers face a cost of learning
- Proposition 1: Specialization
For any given allocation of knowledge, workers in each class
specialize either in production or in the transmission of knowledge
about solutions.
Moreover, only one class specializes in production, and all other classes are formed by problem solvers who support workers in that class.
A Model of Communication and Knowledge Acquisition in Production 2
Proposition 2. Nonoverlapping knowledge.
No solution is known by two different classes.
A Model of Communication and Knowledge Acquisition in Production 3
- Proposition 3. Organization by frequency
Production workers learn to solve the most common problems; problem solvers learn the exceptions.
Moreover, the higher up in the list of production workers a problem solver is, the more unusual the problems she is able to solve. Information in the form of solutions to problems always flows in the same direction, from the highest to the lowest level, since this minimizes communication costs.
If by difficulty: Production workers learn to solve the easiest problems and problem solvers learn to solve the harder ones. Moreover, the higher up in the list of production workers a problem solver is, the harder the problems she is able to solve
A Model of Communication and Knowledge Acquisition in Production 4
Proposition 4. Pyramidal organization
An organization with multiple layers has a pyramidal structure, with each layer a smaller size than the previous one
Problem for each firm:
- The problem an organization confronts is to allocate to each layer
1) a measure of workers,
2) knowledge,
3) a list of layers whom workers in a particular layer i may ask for
solutions.
Comparative statics
See slides
Implications
See slides
Conclusions
- We have modelled an organization whose aim is to structure the acquisition
of knowledge to economize on learning and communication costs. - By incorporating the role of hierarchical organization in solving problems
encountered in production - Path to follow: assigning workers to positions in the hierarchy and obtaining
equilibrium skill-wage functions; design incentive systems to ensure that
workers deal with the right problems rather than over or under referring
them to other layers
Specialization, Firms, and Markets: The Division of Labor within and between Law Firms
What do they do?
When do firms efficiently govern relationships between specialists?
When do markets?
Investigate whether and how law firms’ field boundaries are sensitive to the division of labor?
Examine which types of specialists tend to work in the same firm and which tend not to do so
Law Firms
Check Slides and Recordings
Effects on information technology and communication
Effects on information technology and communication are commonly aggregate but … authors suggest it is a mistake!
Information technology (IT)
- spread of cheap storage and processing of data
- cheaper information
- decentralizing or “empowering” force
Communications technology (CT)
- spread of cheap wired and wireless communications
- easier communication- centralizing force
Theory: The Race Between Communication and Information Technology
(Assumptions)
Assumptions
I. Production Requires Time and Knowledge
II. Knowledge Acquisition Is Costly
III. Knowledge Can Be Communicated
Cheaper Communication Centralizes;
Cheaper Information Access Decentralizes
Concluding remarks
- Aggregate information and communication technologies (ICT) is
incorrect - Information technologies (IT) are associated with increased autonomy
and span of control - facilitating more effective employee decision
making. - Communications technologies (CT) are associated with decreased
autonomy - decisions will be passed up to the centre of the firm - Automation theories → information technologies associated with
centralization - Coordination theories →communication technologies associated with
decentralization
The Anatomy of French Production Hierarchies
Layers: Group of employees, with similar characteristics summarized in their knowledge, who perform similar tasks within the organization
Hierarchical organization: Higher layers of management are smaller, more knowledgeable employees whose subordinates are employees in lower layers
