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Centralization vs. Decentralization in a Multi-Unit Organization: A Computational Model of a Retail Chain as a Multi-Agent Adaptive System

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Author Info

  • Myong-Hun Chang
  • Joseph E. Harrington Jr.

Abstract

A computational model of a retail chain is developed in which store managers continually search for better practices. Search takes place over a rugged landscape defined over the space of store practices. The main objective of this research is to determine how the amount of discretion given to store managers, as to how they run their stores, influences the rate of innovation at the store level. We find that greater decentralization enhances firm performance when stores' markets are sufficiently different, the horizon is sufficiently long, and market are sufficiently stable.

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Bibliographic Info

Paper provided by Santa Fe Institute in its series Working Papers with number 00-02-010.

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Date of creation: Feb 2000
Date of revision:
Handle: RePEc:wop:safiwp:00-02-010

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Related research

Keywords: Decentralization; organization; innovation.;

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Cited by:
  1. Chang, Myong-Hun & Harrington, Joseph Jr., 2006. "Agent-Based Models of Organizations," Handbook of Computational Economics, in: Leigh Tesfatsion & Kenneth L. Judd (ed.), Handbook of Computational Economics, edition 1, volume 2, chapter 26, pages 1273-1337 Elsevier.
  2. He, Zhou & Wang, Shouyang & Cheng, T.C.E., 2013. "Competition and evolution in multi-product supply chains: An agent-based retailer model," International Journal of Production Economics, Elsevier, vol. 146(1), pages 325-336.
  3. Lichtenthaler, Ulrich, 2010. "Organizing for external technology exploitation in diversified firms," Journal of Business Research, Elsevier, vol. 63(11), pages 1245-1253, November.
  4. Chowdhury, Sanjib, 2011. "The moderating effects of customer driven complexity on the structure and growth relationship in young firms," Journal of Business Venturing, Elsevier, vol. 26(3), pages 306-320, May.
  5. Jason Barr & Nobuyuki Hanaki, 2005. "Firm Structure, Search and Environmental Complexity," Working Papers Rutgers University, Newark 2005-007, Department of Economics, Rutgers University, Newark.
  6. Giannoccaro, Ilaria, 2011. "Assessing the influence of the organization in the supply chain management using NK simulation," International Journal of Production Economics, Elsevier, vol. 131(1), pages 263-272, May.

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