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An Interaction Value Perspective on Firms of Differing Size

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  • Walid F. Nasrallah

    (Stanford University)

  • Raymond E. Levitt

    (Stanford University)

Abstract

We present a general model of a network of interacting individuals, each of whom derives a known, real-valued benefit from each possible dyadic interaction. The model views interactions as knowledge-transfer exchanges that add value to the organization. We use this model to derive interaction patterns within an organization. We assume that the value of dyadic interaction benefits is distributed as a randomly permuted geometric series. Moreover, interactions only add value when a large enough waiting period is observed between interaction attempts. We show that an organization optimized for knowledge transfer has a distribution of interaction frequencies which correlates well with observations. Organizations of differing sizes can have similar optimal structures as long they have similar normalized levels of interdependence between interactions, and distribution of interaction benefit values. This research has implications for the design of communication infrastructure in a growing organization, as well as for the predictive value of modeling organizations at different scales.

Suggested Citation

  • Walid F. Nasrallah & Raymond E. Levitt, 2001. "An Interaction Value Perspective on Firms of Differing Size," Computational and Mathematical Organization Theory, Springer, vol. 7(2), pages 113-144, August.
    • Handle: RePEc:spr:comaot:v:7:y:2001:i:2:d:10.1023_a:1011352904886
    DOI: 10.1023/A:1011352904886
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    References listed on IDEAS

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    1. Jay R. Galbraith, 1974. "Organization Design: An Information Processing View," Interfaces, INFORMS, vol. 4(3), pages 28-36, May.
    2. Walid Nasrallah & Peter Glynn & Raymond Levitt, 1998. "Diversity and Popularity in Organizations and Communities," Computational and Mathematical Organization Theory, Springer, vol. 4(4), pages 347-372, December.
    3. Raymond E. Levitt & Jan Thomsen & Tore R. Christiansen & John C. Kunz & Yan Jin & Clifford Nass, 1999. "Simulating Project Work Processes and Organizations: Toward a Micro-Contingency Theory of Organizational Design," Management Science, INFORMS, vol. 45(11), pages 1479-1495, November.
    4. Pfeffer, Jeffrey, 1997. "New Directions for Organization Theory: Problems and Prospects," OUP Catalogue, Oxford University Press, number 9780195114348.
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    Cited by:

    1. Walid Nasrallah & Raymond Levitt & Peter Glynn, 2003. "Interaction Value Analysis: When Structured Communication Benefits Organizations," Organization Science, INFORMS, vol. 14(5), pages 541-557, October.
    2. Walid F. Nasrallah, 2006. "When does management matter in a dog-eat-dog world: An “Interaction Value Analysis” model of organizational climate," Computational and Mathematical Organization Theory, Springer, vol. 12(4), pages 339-359, December.
    3. Daniel Diermeier & Wallace J. Hopp & Seyed Iravani, 2007. "Innovating under Pressure—Towards a Science of Crisis Management," NBER Chapters, in: Innovation Policy and the Economy, Volume 7, pages 125-154, National Bureau of Economic Research, Inc.

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