L23 - Organization of ProductionReturn

This paper incorporates hierarchical structure into the neoclassical theory of the firm. Firms are hierarchical in two respects: the organization of workers in production and the wage structure. The firm's hierarchy is represented as a sector of a circle, where the radius represents the hierarchy's height, the width of the sector represents the breadth of the hierarchy at a given height, and the angle of the sector represents the span of control. A perfectly competitive firm chooses height and width, as well as capital, in order to maximize profit. We analyse the short-run and long-run impact of changes in scale economies, input substitutability, and input and output prices on the firm's hierarchical structure. We find that the firm grows as the specialization of its workers increases or as its output price increases relative to input prices. The effect of changes in scale economies is contingent on the price of output. The model also brings forth an analysis of wage inequality within the firm, which is found to be independent of the firm's hierarchical organization of workers, and only depends on the firm's wage schedule.

The goal of this article is to determine whether low capital intensive firms, characterised by low productivity and low level of R&D activities that operate in technologically intensive branches of the Czech manufacturing industry, tend to be localised in economically lagging regions which are attractive for costs seeking FDI. We wanted to determine to the Czech regions that are more threatened by delocalisation of manufacturing activities. The assessment of companies' localisation stability is based on 3 economic indicators representing internal keep-factors of delocalisation - capital intensity, complexity of value chain, and sophistication of production processes. We did not confirm the hypothesis on concentration of footloose firms in economically lagging districts with high unemployment and accessibility of investment incentives. These firms, which are considered to be the most predisposed for delocalisation, are geographically dispersed. Localisation of technologically intensive branches corresponds neither to the settlement hierarchy nor to the economic performance of districts. Regional differences of indicators of localisation stability exhibit a strong path dependency effect.