Organizational design is an important determinant of firm transparency. Kourouxous and Schöttner focus on recent organizational innovations that affect the workspace of firms. Many of these innovations endow lower-level employees with more responsibility for the coordination of work. Consequently, more production-relevant information is allocated to these employees, while higher-level decision-makers experience a reduction of transparency. The project will systematically explore the consequences of these organizational phenomena on transparency within and between firms by factoring in the endogenous adjustment of managerial performance reporting, incentivization regimes and the firm’s tax environment.
How do organizational innovations affect transparency within and between firms?
Technological advance, changing market environments, and regulation bring about multifaceted
opportunities and challenges for firms. As one consequence, the organizational design of firms
has been undergoing substantial transformations in the past few decades. These organizational
innovations have consequences for firm-internal transparency as they affect how information is
generated, distributed, received, and processed by economic agents within firms. This imposes
novel challenges on firms because previously employed performance measurement systems, incentive schemes, and coordination devices are likely to require substantial adaptations.
Our project studies how the adoption of organizational innovations impacts transparency within and between firms. We focus on recent organizational innovations that endow lower-level employees with broader decision-making authority in order to implement self-organized teamwork. In the context of our research, transparency refers to the availability of decision relevant information to employees, managers, and firm owners. A higher degree of transparency typically corresponds to more parties being informed about a given piece of information or parties investing in the acquisition of more precise information. In our research we also account for the endogenous adjustment of performance measurement, reporting, and incentivization regimes. Moreover, we integrate optimal firm boundaries and the firm’s tax environment in the analysis.
Our research aims to present a more complete understanding that helps stakeholders assess how organizational change drives firm transparency.