Organizational communication structure and performance

The effect of organizational communication structure on performance is stud ied using a project selection Framework in which heterogeneous, rational ag ents can reject or accept projects. A hierarchy performs better than a poly archy in tough environments, whereas the reverse holds in friendly environm ents. Hierarchies can be too strict from a social welfare point of view. In deed, if the value of profitable but rejected projects is taken into accoun t, a single agent can perform better than a hierarchy. (C) 2000 Elsevier Sc ience B.V. All rights reserved. JEL classification: D21; D70; D80.