Economic Theories of Middle Management: Monitoring, Communication, and the Middle Manager's Dilemma

This article aims at summarizing several organizational functions of middle management, and clarifying their tradeoffs. Setting up and analyzing a simple model of a top, a middle, and a bottom manager, we show the following results: (i) middle management benefits the organization only if the middle manager has higher information gathering capabilities than the top, as well as serving to have effective monitoring and communication from the middle to the top is not necessarily desirable for the organization, because of its detrimental effect on the bottom. Result (ii) arises from a tradeoff between communication and incentives: While more communication improves project implementation by the top, it discourages the bottom to take the initiatives to find and propose a new project. We then discuss how our results are related to important features of stylized Japanese management.

(Special Edition: Managers in Japan)

労働政策研究・研修機構

2010-10

English(eng)

journal article

VoR

13489364

AA11893457

Japan Labor Review

7

4

5

22

010a Journal Articles　=　雑誌掲載論文

https://hdl.handle.net/10086/22079