TY  - JOUR
AU  - Guadalupe,Maria
AU  - Wulf,Julie
TI  - The Flattening Firm and Product Market Competition: The Effect of Trade Liberalization
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14491
PY  - 2008
Y2  - November 2008
UR  - http://www.nber.org/papers/w14491
L1  - http://www.nber.org/papers/w14491.pdf
N1  - Author contact info:
Maria Guadalupe
Graduate School of Business
Columbia University
3022 Broadway, Uris Hall 624
New York, NY 10027
E-Mail: Maria.GUADALUPE@insead.edu

Julie Wulf
Harvard Business School
Soldiers Field
Boston, MA 02163
Tel: 617/495-8542
Fax: 617/496-5859
E-Mail: jwulf@hbs.edu
AB  - This paper establishes a causal effect of competition from trade liberalization on various characteristics of organizational design. We exploit a unique panel dataset on firm hierarchies (1986-1999) of large U.S. firms and find that increasing competition leads firms to become flatter, i.e., (i) reduce the number of positions between the CEO and division managers (DM), (ii) increase the number of positions reporting directly to the CEO (span of control), (iii) increase DM total and performance-based pay. The results are generally consistent with the explanation that firms redesign their organizations through a set of complementary choices in response to changes in their environment.
ER  -