Decentralized Autonomous Organizations: Can Decision Structures Enhance Participation?

Abstract

Misalignment between individual preferences and organizational decisions can lead to demotivation, absence, and turnover. This is particularly challenging for decentralized organizations that rely on management tools based on hierarchical authority to limit these negative effects of misalignment. We theorize that (decentralized) organizations can use decision-making structures to moderate the negative impact of misalignment. Using a dataset of 140 decentralized autonomous organizations, we find that implementing weighted decision-making structures, where members can express preference intensity, significantly alleviates this negative impact. Likewise, quadratic decision-making structures, which limits the influence of members with high voting power, reduces the adverse effects of misalignment.