Coordination of internal supply chains in vertically integrated high-tech manufacturing organizations (HTMOs)

This paper uses economic mechanisms to coordinate supply chains within High-Tech Manufacturing Organizations (HTMOs). It models the one-shot initial production and allocation decisions involved in the production and marketing of new technologies; these decisions are driven by the economic objectives of the firm and of the employees with private information - the experts. It analyzes and compares the efficiency of three coordination policies: centralized command and control, centralized revelation, and decentralized revelation. It shows that decentralized policies introduce an additional cost, and it proposes rules of thumb for coordinating supply chains within firms that use many experts. (C) 2000 Published by Elsevier Science B.V. All rights reserved.