ONLINE APPENDIX “ A Theory of Organizational Dynamics: Internal Politics and Efficiency”

The Online Appendix contains the following five sections. In the first section, we provide a formal proof of the one-shot deviation principle in our context. It is needed because the sincere voting condition (3) in our paper is implicitly built on this principle. In the second section, we develop a method to compute long-term welfare of the equilibrium outcomes. In the third section, we extend our stylized baseline model in various important dimensions to show the main results on long-term welfare are very robust. In the fourth section, we show graphically the testable implications on organization behavior such as expected search length, the fraction of time spent in contentious vs. homogeneous states, and the expected length of time between switches of control. Finally, in the last section, we provide a complete characterization of all equilibria under unanimity voting.