Complexity and Organizational Architecture
AbstractThis paper revisits the literature on modelling organizations by means of networks of agents. Individual agents are engaged in screening projects, and architectural features of organizations, that is how each agent’s decision combines with those of others, a®ect the organization’s screening performance. It emphasizes how an organization of several agents may be improve upon individual performance by a suitable arrangement of the flow of decisions. The paper is motivated, in part, by a theorem due to Von Neumann, Moore and Shannon on how to build reliable networks using unreliable components and extends previous contributions by Sah and Stiglitz by recasting their original model in standard firm-theoretic terms and endogenizing its features. For an organization’s screening performance to improve over those of an individual’s, it must be sigmoid in individual performance, as measured by the probability that a good (bad) project be accepted (rejected). This is indeed the case for organizations with mixed Sah-stiglitz architectures, such as hierarchies made up of components that are polyarchies, and polyarchies made up of components that are hierarchies, give rise to such functions. This property is in turn critical for determining of the optimal number of levels of a hierarchy, and for endogenizing individual screening performance. The models are extended to allow for individuals’ own screening to be influenced from the opinions of superiors and subordinates. The paper examines the implications of such interactions for the limits to organizational performance.government to influence the real value of assets using fiscal and monetary policy.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Economics, Tufts University in its series Discussion Papers Series, Department of Economics, Tufts University with number 0313.
Date of creation: 2003
Date of revision:
Contact details of provider:
Postal: Medford, MA 02155, USA
Phone: (617) 627-3560
Fax: (617) 627-3917
Web page: http://ase.tufts.edu/econ
organizations; architecture; complexity; composition;
Other versions of this item:
- D20 - Microeconomics - - Production and Organizations - - - General
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-08-31 (All new papers)
- NEP-BEC-2004-08-31 (Business Economics)
- NEP-CBE-2004-08-31 (Cognitive & Behavioural Economics)
- NEP-HPE-2004-08-31 (History & Philosophy of Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Visser, Bauke, 2000. "Organizational communication structure and performance," Journal of Economic Behavior & Organization, Elsevier, vol. 42(2), pages 231-252, June.
- Yannis Ioannides, 2001.
"Topologies of Social Interactions,"
Discussion Papers Series, Department of Economics, Tufts University
0104, Department of Economics, Tufts University.
- Yannis M. Ioannides, 2004. "Topologies Of Social Interactions," Econometric Society 2004 North American Winter Meetings 287, Econometric Society.
- Raaj Kumar Sah, 1991.
"Fallibility in Human Organizations and Political Systems,"
Journal of Economic Perspectives,
American Economic Association, vol. 5(2), pages 67-88, Spring.
- Sah, R.K., 1991. "Fallibility In Human Organizations And Political Systems," Papers 625, Yale - Economic Growth Center.
- Raaj Kumar Sah & Joseph E. Stiglitz, 1987.
"The Architecture of Economic Systems: Hierarchies and Polyarchies,"
NBER Working Papers
1334, National Bureau of Economic Research, Inc.
- Sah, Raaj Kumar & Stiglitz, Joseph E, 1986. "The Architecture of Economic Systems: Hierarchies and Polyarchies," American Economic Review, American Economic Association, vol. 76(4), pages 716-27, September.
- Ioannides, Yannis M., 1987. "On the architecture of complex organizations," Economics Letters, Elsevier, vol. 25(3), pages 201-206.
- Zwiebel, Jeffrey H. & Vayanos, Dimitri & DeMarzo, Peter M., 2001.
"Persuasion Bias, Social Influence, and Uni-Dimensional Opinions,"
1719, Stanford University, Graduate School of Business.
- Peter M. Demarzo & Dimitri Vayanos & Jeffrey Zwiebel, 2003. "Persuasion Bias, Social Influence, And Unidimensional Opinions," The Quarterly Journal of Economics, MIT Press, vol. 118(3), pages 909-968, August.
- Sushil Bikhchandani & David Hirshleifer & Ivo Welch, 2010.
"A theory of Fads, Fashion, Custom and cultural change as informational Cascades,"
Levine's Working Paper Archive
1193, David K. Levine.
- Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 992-1026, October.
- Jan W. Rivkin, 2000. "Imitation of Complex Strategies," Management Science, INFORMS, vol. 46(6), pages 824-844, June.
- Kremer, M & Maskin, E, 1996.
"Wage Inequality and Segregation by Skill,"
96-23, Massachusetts Institute of Technology (MIT), Department of Economics.
- Stanley Reiter, 1995. "Coordination and the Structure of Firms," Discussion Papers 1121, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Guido Fioretti & Bauke Visser, 2004. "A Cognitive Approach to Organizational Complexity," Tinbergen Institute Discussion Papers 04-033/1, Tinbergen Institute.
- Sah, Raaj Kumar & Stiglitz, Joseph E, 1985. "Human Fallibility and Economic Organization," American Economic Review, American Economic Association, vol. 75(2), pages 292-97, May.
- Mount,Kenneth R. & Reiter,Stanley, 2002. "Computation and Complexity in Economic Behavior and Organization," Cambridge Books, Cambridge University Press, number 9780521800563, December.
- Prat, Andrea, 2002. "Should a team be homogeneous?," European Economic Review, Elsevier, vol. 46(7), pages 1187-1207, July.
- Marengo, Luigi, et al, 2000.
"The Structure of Problem-Solving Knowledge and the Structure of Organizations,"
Industrial and Corporate Change,
Oxford University Press, vol. 9(4), pages 757-88, December.
- Luigi Marengo & Giovanni Dosi & Paolo Legrenzi & Corrado Pasquali, 1999. "The structure of problem-solving knowledge and the structure of organisations," LEM Papers Series 1999/09, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
- Szentes, Balazs & Koriyama, Yukio, 2009. "A resurrection of the Condorcet Jury Theorem," Theoretical Economics, Econometric Society, vol. 4(2), June.
- Sah, Raaj Kumar & Stiglitz, Joseph E, 1988. "Committees, Hierarchies and Polyarchies," Economic Journal, Royal Economic Society, vol. 98(391), pages 451-70, June.
- B. Visser, 2002. "Complexity, Robustness, and Performance," Tinbergen Institute Discussion Papers 02-048/1, Tinbergen Institute.
- Koh Winston T. H., 1992. "Variable evaluation costs and the design of fallible hierarchies and polyarchies," Economics Letters, Elsevier, vol. 38(3), pages 313-318, March.
- Gehrig, Thomas & Régibeau, Pierre & Rockett, Katharine, 1998. "Project Evaluation and Organizational Form," CEPR Discussion Papers 1888, C.E.P.R. Discussion Papers.
- Michael Kremer & Eric Maskin, 1996. "Wage Inequality and Segregation," Harvard Institute of Economic Research Working Papers 1777, Harvard - Institute of Economic Research.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Caroline Kalogeropoulos).
If references are entirely missing, you can add them using this form.