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CEP discussion paper

A Task-Based Approach to Organization: Knowledge, Communication and Structure

We bridge a gap between organizational economics and strategy research by developing a task-based approach to analyze organizational knowledge, process and structure, and deriving testable implications for the relation between production and organizational structure. We argue that organization emerges to integrate disperse knowledge and to coordinate talent in production and is designed to complement the limitations of human ability. The complexity of the tasks undertaken determines the optimal level of knowledge acquisition and talent. The relations between tasks, namely, complementarities or substitutabilities and synergies, determine the allocation of knowledge among members of the organization. Communication shapes the relation between individual talent, and governs the organizational process and structure that integrates disperse knowledge to perform tasks more efficiently. Organization structure can also be deliberately designed ex ante to correct bias of individual judgement, the extent to which is dependent on the attributes of tasks. Organization process and the routinized organizational structure are the core of organizational capital, which generates rent and sustains organizational growth. This task-based approach enriches the existing body of organization studies, in particular the knowledge-based theory of the firm and the dynamic capabilities theory.

Luis Garicano and Yanhui Wu

October 2010     Paper Number CEPDP1013

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This CEP discussion paper is published under the centre's Growth programme.