Monday, January 2, 2012

More Trust Increases Value Of Information Technology: Leads to More Corporate Decentralization And Delegation

From Harvard Business School Working Knowledge Newsletter, "The Organization of Firms Across Countries" by Carmen Nobel:
  • If a firm is headquartered in a country where trust is prevalent (such as Sweden), it is much more likely to decentralize its decision making than if it is headquartered in a country in which trust is rarer (such as India). In short, higher trust leads to more decentralization.

  • Trust also enables a firm to hire a large number of plant managers, because the CEO will feel comfortable delegating decisions to their direct reports without spending too much time on supervision. Thus, higher trust increases firm size.

  • Higher trust increases the marginal value of information technology's effect on productivity.
Full research paper, "The Organization of Firms Across Countries" by Nicholas Bloom, Raffaella Sadun, John Van Reenen.

No comments:

Post a Comment