Hierarchies, Knowledge, and Power Inside Organizations

This paper contributes to an old and still unresolved question in the theory of organizations, namely, what do bosses do? Whether and to what extent managerial functions are productive or not for the well functioning of an organization has to be understood with respect to the tension between knowledge and power. Here, we start addressing such a tension with reference to the very nature of organizations. Next, we discuss its historical unfolding in two archetypical organizational modes of production, Taylorism and Toyotism. Third, these two archetypical configurations are studied by means of a model of organizations populated by three sets of agents, workers, managers, and the principal, endowed by different attributes and functions. The fitness of alternative organizational setups is studied under diverse degrees of complexity of the landscape.