We characterize the optimal communication network in a rm with a modular production func- tion, which we model as a network of decisions with a non-overlapping community structure. Optimal communication is characterized by two hierarchies that determine whom each agent receives information from and sends information to. Receiver rank depends only on module cohesion while sender rank also depends on decision-specic values of adaptation. When the hierarchies are the reverse of each other, optimal communication is bottom up in aggregate, and when they are the same, it has a core-periphery structure, in which the core contains the most cohesive modules.
organization; communication; hierarchies,; network design;
- D23: Organizational Behavior • Transaction Costs • Property Rights
- D85: Network Formation and Analysis: Theory
- L23: Organization of Production
Niko Matouschek (Northwestern University), “Organizing Modular Production”, CSIO-TSE 19th Joint Workshop on Industrial Organization, Toulouse, 2022.