Working Paper: CEPR ID: DP9395
Authors: Wouter Dessein; Andrea Galeotti; Tano Santos
Abstract: We examine the allocation of scarce attention in team production. Each team member is in charge of a specialized task, which must be adapted to a privately observed shock and coordinated with other tasks. Coordination requires that agents pay attention to each other, but attention is in limited supply. We show that when attention is scarce, organizational focus and leadership naturally arise as a response to organizational trade-offs between coordination and adaptation. At the optimum, all attention is evenly allocated to a select number of "leaders." The organization then excels in a small number of focal tasks at the expense of all others. Our results shed light onthe importance of leadership, strategy and ?core competences,? as well as new trends in organization design. We also derive implications for the optimal size or ?scope? of organizations. Surprisingly, improvements in communication technology may result in smaller but more adaptive organizations.
Keywords: attention; coordination; core competencies; leadership; organization size; organizational design; organizational strategy
JEL Codes: D2; D83; D85; L2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| limited attention (D91) | organizational focus (L21) |
| limited attention (D91) | necessity for organizational focus (L21) |
| improvements in communication technology (L96) | smaller, more adaptive organizations (L25) |
| limited attention (D91) | leadership arises endogenously (D70) |
| limited attention (D91) | leadership (M54) |