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• Column | Communications of the ACM | November 2012

  Decentralization versus Centralization in IT Governance: It's Not as Simple as You Might Think

  Kristina Steffenson McElheran

  Citation:

  McElheran, Kristina Steffenson. "Decentralization versus Centralization in IT Governance: It's Not as Simple as You Might Think." Communications of the ACM 55, no. 11 (November 2012): 28–30.

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• Working Paper | HBS Working Paper Series | 2012

  Information Technology and Boundary of the Firm: Evidence from Plant-Level Data

  Chris Forman and Kristina McElheran

  We study the relationship between different margins of information technology (IT) use and vertical integration using plant-level data from the U.S. Census of Manufactures. Focusing on the short-run decision of whether to allocate production output to downstream plants within the same firm or to external customers, we find that customer-focused IT, by itself, has surprisingly little impact. In contrast, adoption of upstream supplier-focused IT at a plant is associated with a significant decline in downstream vertical integration. However, the greatest decline in within-firm transfers occurs when supplier- and customer-facing IT are adopted together, suggesting the presence of complementarities in supply chain technology adoption. These results are consistent with the view that, by reducing external coordination costs, IT investments promote a decline in plant-level vertical integration, but only when those investments are made jointly with both suppliers and customers. Our results provide less support for the view that IT investments led to a decline in vertical integration by lowering transactions risks.

  Keywords: Information Technology; Technology Adoption; Production; Factories, Labs, and Plants; Vertical Integration; Supply Chain; Manufacturing Industry; United States;

  Citation:

  Forman, Chris, and Kristina McElheran. "Information Technology and Boundary of the Firm: Evidence from Plant-Level Data." Harvard Business School Working Paper, No. 12–092, April 2012.

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• Working Paper | HBS Working Paper Series | 2013

  Delegation in Multi-Establishment Firms: Evidence from I.T. Purchasing

  Kristina McElheran

  Recent contributions to a growing theory literature have focused on the tradeoff between adaptation and coordination in determining delegation within firms. Empirical evidence, however, is limited. Using establishment-level data on decision rights over information technology investments, I find that a high net value of adaptation is strongly associated with delegation, as are local information advantages and firm-wide diversification; in contrast, a high net value of within-firm coordination is correlated with centralization. Variation across establishments within firms is widespread: most firms are neither fully centralized nor fully decentralized. Delegation patterns are largely consistent with standard team-theory predictions; however, certain findings, such as a negative correlation between delegation and firm size, call for a consideration of agency costs, as well.

  Keywords: Business Units; Business Headquarters; Decision Choices and Conditions; Operations; Organizational Design; Organizational Structure; Power and Influence; Adaptation; Cooperation;

  Citation:

  McElheran, Kristina. "Delegation in Multi-Establishment Firms: Evidence from I.T. Purchasing." Harvard Business School Working Paper, No. 11–101, April 2011. (Revised April 2012, July 2012, January 2013.)

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