Research Details

Abstract

We characterize the optimal communication network in a firm with a modular production function, 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-specific 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.

Type

Working Paper

Author(s)

Bryony Reich, Niko Matouschek, Michael Powell

Date Published

2023

Citations

Reich, Bryony, Niko Matouschek, and Michael Powell. 2023. Organizing Modular Production.