Production Functions in the Analysis of Organizational Structure

In the study of organizational structure and behavior,economic analysis backed by mathematical models can throw much light on observed practices and potential improvements. Such characteristics of organization as managerial effectiveness, span of control, organizational advantage etc. turn out to be results of not just technical relationships but of economic choice. We want to demonstrate this point by asking the following general question which is basic to the economics of organization: under what conditions is organized effort superior to individual operation ? How does the superiority of organizational effort fare when the level of organization as measured by the number of ranks increases?