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An Efficient Frontier in Organization Design 1

This paper presents a method to analyze a broad range of decision-making organizational forms that lie between the hierarchy and the polyarchy. The method predicts Type I and II errors, speed, cost, and proportion of good projects approved for each organizational form. The model has far reaching implications, as all organizations have to decide how centralized or decentralized they are going to be. One important result is that not all organizations are efficient; some organizational forms should always be preferred over others. Some implications of the model are discussed in light of the organization design and the innovation literature.