Hierarchical Decision Delays and Operational Downtime
RCTReview
Centralized decision-making without middle-management spending authority forces factories to stall production over minor equipment failures while waiting for absent owners to approve basic repairs.
Picture this
Imagine a delivery driver whose truck gets a flat tire, but company rules require the distant CEO to personally approve buying a $20 patch kit; the truck sits idle on the highway for weeks waiting for the CEO to return from a business trip.
What the evidence says
Middle plant managers lacked financial spending authority to purchase spare parts for broken textile lifts and trolleys, causing basic equipment breakdowns to persist unaddressed and inducing substantial productivity drops.
- Who was studied
- Large Indian textile manufacturing plants in the BEMMR field experiment.
- How
- Direct field observation and operational tracking across factory floors.
What to do
Grant plant floor managers emergency spending limits for essential machinery spare parts to prevent cascading operational downtime.
From the source
"The plant managers did not have the authority to order parts to repair this equipment, and since the owners were often traveling on business, these problems would persist."
Why Do Firms in Developing Countries Have Low Productivity?