:  Goubko M. V., Mishin S. P.
:  Optimal Hierarchies in Firms: a Theoretical Model
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( ):  Graduate School of Management, St. Petersburg Univ.
:  2009
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:  Contributions to Game Theory and Management, GTM 2009
:  Goubko M.V., Mishin S.P. Optimal Hierarchies in Firms: a Theoretical Model // Contributions to Game Theory and Management. Vol. II. Collected papers presented on the Second International Conference Game Theory and Management / Editors L. Petrosjan and N. Zenkevich. - SPb.: Graduate School of Management SPbU, 2009, P. 124-136.
:  A normative economic model of management hierarchy design in firms is proposed. The management hierarchy is sought to minimize the running costs. Along with direct maintenance expenses these costs include wastes from the loss of control. The results comprise the analytic expressions for the optimal hierarchy attributes: span of control, headcount, efforts distribution, wages differential, etc, as functions of exogenous parameters.
They allow analyzing the impact of environment parameters on a firms size, financial results, employees wages and shape of hierarchy. The detailed analysis of this impact can help drawing up policy recommendations on rational bureaucracy formation in firms.

Keywords: organizational structure, optimal hierarchy, manager, effort.
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