Coordination within the Firm and Endogenous Growth

The purpose of the paper is to show how firm organization maychange due to endogenous technical change. The firm is depictedas an organization where a collective knowledge on manufacturing(mastering and improving existing technology) is built throughlearning by doing, requiring coordination between workers withinthe workshop. Two styles of coordination, each of them correspondingto a special design of the division of labor, are modeled: acentralized one, in which knowledge is confined to specializedworkers (engineering office) and a decentralized one, in whichevery worker participates in learning. We show that the relativeefficiency (static and dynamic) of these two styles of coordinationmay change when the differentiation of products, stemming fromendogenous forces, grows: whereas the centralized style is moreefficient when the technological level is low, the decentralizedone becomes more efficient when the technological level is higher.