Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
This paper addresses how an organization becomes a bureaucracy. Bureaucratization emerges from a self‐enforced norm of reciprocity between agents in an organization who exchange favors and promote subgoals which differ from the objective of the firm. Such collusive behavior becomes harder and harder to prevent over time. As a result, incentive schemes lose their flexibility and bureaucratization becomes a necessary equilibrium phenomenon in the long run. The distribution of agents' private information, their preferences for the future and the force of the social norm of reciprocity are analyzed in terms of their effects on the long‐run behavior of the organization and on the speed of the bureaucratization process.