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Formal and Real Authority in Organizations
Open accessAbstract
This paper develops a theory of the allocation of formal authority (the right to decide) and real authority (the effective control over decisions) within organizations, and it illustrates how a formally integrated structure can accommodate various degrees of "real" integration. Real authority is determined by the structure of information, which in turn depends on the allocation of formal authority. An increase in an agent's real authority promotes initiative but results in a loss of control for the principal. After spelling out (some of) the main determinants of the delegation of formal authority within organizations, the paper examines a number of factors that increase the subordinates' real authority in a formally integrated structure: overload, lenient rules, urgency of decision, reputation, performance measurement, and multiplicity of superiors. Finally, the amount of communication in an organization is shown to depend on the allocation of formal authority.
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Citations
Cited by
The Provision of Incentives in Firms
Prendergast, C. (1999) · Journal of Economic Literature · doi:10.1257/jel.37.1.7 · Cited by 3,338
Intrinsic and extrinsic motivation
Benabou, R., & Tirole, J. (2003) · Review of Economic Studies · doi:10.1111/1467-937x.00253 · Cited by 2,913
Some Simple Economics of Open Source
Lerner, J., & Tirole, J. (2002) · The Journal of Industrial Economics · doi:10.1111/1467-6451.00174 · Cited by 2,355
Self-citationBerger, A. N., Miller, N. H., Petersen, M. A., Rajan, R. G., & Stein, J. C. (2005) · Journal of Financial Economics · doi:10.1016/j.jfineco.2004.06.003 · Cited by 1,888
Inequality and Economic Growth: The Perspective of the New Growth Theories
Aghion, P., Caroli, E., & García-Peñalosa, C. (1999) · Journal of Economic Literature · doi:10.1257/jel.37.4.1615 · Cited by 1,848
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Metadata
- Authors
- Aghion, P., & Tirole, J.
- Venue
- Journal of Political Economy
- Publisher
- University of Chicago Press
- Published
- 1997-02
- Volume
- 105
- Issue
- 1
- Pages
- 1-29
- ISSN
- 0022-3808 (ISSN-L)
- 1537-534X
- OpenAlex
- W2165717995
- Cited by
- 3,046
- References
- 0
- FWCI
- 105.65
- Type
- journal article
- Language
- en
- Open access
- green
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- Aghion, P., & Tirole, J. (1997). Formal and Real Authority in Organizations. Journal of Political Economy. https://doi.org/10.1086/262063
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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
