Essays on the Economics of Organization

This thesis consists of three empirical studies on the economics of organization using novel data on organizations for analysis. Chapter 1 uses the longitudinal and nationally representative data from Statistics Canada's Workplace and Employee Survey to examine the distinct effects of Information and Communication Technology (ICT) on decentralization of decision rights. Using a sample of workplaces from different sectors and controlling for unobserved workplace-level heterogeneity, I find that decentralization (defined as the case when workers can plan work for themselves) is more likely when database software is used (which reduces learning cost) but is less likely when communication system is used (which reduces communication cost). These results are consistent with the predictions of the organizational model by Garicano (2000). Chapter 2 also uses the data from Workplace and Employee Survey and examines the impact of competition on the quality of the middle management in terms of the use of Human Resources Management (HRM) practices. I find that increased competition leads to an improvement in managerial quality, proxied by the use of HRM practices. These results complement the industry-specific evidence documented in the literature. Chapter 3, co-authored with Professor Varouj A. Aivazian, uses the management score of Bloom and Van Reenen (2007) as a proxy for managerial quality to examine the extent to which market structure interacts with capital structure. We find that leverage is negatively related to competition (measured by Import Penetration Ratio, Lerner Index, and Herfindahl-Hirschman Index). Besides, we find that competition is positively associated with managerial quality, and that managerial quality is in turn negatively related to leverage. We conclude that managerial quality explains the impact of competition on leverage which suggests that managerial quality serves as an important link between capital structure and market structure.Ph