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© 1994 Oxford University Press

research-article

Coordination within the Firm and Endogenous Growth

NATHALIE GREENAN and DOMINIQUE GUELLEC*

INSEE Department of Economic Studies 15 Bd. Gabriel Péri 92244 BP 100 Malakoff Cedex, France

Abstract

The purpose of the paper is to show how firm organization may change due to endogenous technical change. The firm is depicted as an organization where a collective knowledge on manufacturing (mastering and improving existing technology) is built through learning by doing, requiring coordination between workers within the workshop. Two styles of coordination, each of them corresponding to a special design of the division of labor, are modeled: a centralized one, in which knowledge is confined to specialized workers (engineering office) and a decentralized one, in which every worker participates in learning. We show that the relative efficiency (static and dynamic) of these two styles of coordination may change when the differentiation of products, stemming from endogenous forces, grows: whereas the centralized style is more efficient when the technological level is low, the decentralized one becomes more efficient when the technological level is higher.


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