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Author: | Stennek, J. |
Title: | Does competition make firms more flexible? A study of limited managerial cognition |
Journal: | Journal of Economics & Management Strategy
1994 : SUMMER, VOL. 3:2, p. 279-300 |
Index terms: | COMPETITION COMPANIES COGNITION |
Language: | eng |
Abstract: | A model of procedural decision making gin firms is combined with an oligopoly model to study the effect of limited managerial cognition on firm flexibility. It is argued that a firm may vary its flexibility, and, hence, that there exists a trade-off between decision-making costs and costs due to imperfect adjustment to the environment. The main conclusion is the following: the level of flexibility chosen by firms tends to be too low, from a social welfare point of view. |
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