Optimal organizational hierarchies in firms

    Sergey Mishin Affiliation


One of the main problems in modern economy is to construct an efficient organizational hierarchy allowing to control the firm with minimal cost. This paper describes the mathematical model of optimal hierarchies in firms. Optimal hierarchies for several classes of cost functions are obtained. Particularly, sufficient conditions for tree optimality, 2hier‐archy (any manager has two immediate subordinates) optimality and two‐tier hierarchy optimality are defined.

First Published Online: 14 Oct 2010

Keyword : optimal hierarchy, control cost, structure, firm

How to Cite
Mishin, S. (2007). Optimal organizational hierarchies in firms. Journal of Business Economics and Management, 8(2), 79-99.
Published in Issue
Jun 30, 2007
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This work is licensed under a Creative Commons Attribution 4.0 International License.