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The Importance of Organizational Structure for the Adoption of Innovations

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  • Stephen J. DeCanio

    (Department of Economics, University of California, Santa Barbara, California 93106)

  • Catherine Dibble

    (Department of Geography, University of California, Santa Barbara, California 93106)

  • Keyvan Amir-Atefi

    (Department of Economics, University of California, Santa Barbara, California 93106)

Abstract

Organizational structure affects both the overall behavior of firms and the situations of individuals and subunits within firms. The effect of exogenous changes in the environment (market prices, costs, or regulations) on organizations can be partitioned into the immediate direct effect of the change and the full effect after organizational structure has had time to adjust. This paper develops a computational model of the diffusion of a profitable innovation through a firm, and uses numerical simulations to calculate the relative importance of the direct and structural adjustment components of changes in profitability. One finding is that a failure to recognize the importance of organizational structure on the performance of firms will lead to serious bias in estimation of the costs or benefits of a change in external circumstances. The type of network model developed also has implications for the individuals and divisions that make up the firm. We examine some of the structural characteristics of well-adapted organizations, and show that asymmetries and economic inequalities emerge even when the individual agents' personal characteristics are identical.

Suggested Citation

  • Stephen J. DeCanio & Catherine Dibble & Keyvan Amir-Atefi, 2000. "The Importance of Organizational Structure for the Adoption of Innovations," Management Science, INFORMS, vol. 46(10), pages 1285-1299, October.
    • Handle: RePEc:inm:ormnsc:v:46:y:2000:i:10:p:1285-1299
    DOI: 10.1287/mnsc.46.10.1285.12270
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    References listed on IDEAS

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    2. 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.
    3. Harrington, Donna Ramirez, 2012. "Two-stage adoption of different types of pollution prevention (P2) activities," Resource and Energy Economics, Elsevier, vol. 34(3), pages 349-373.
    4. Anna Dahlqvist & Patrik S derholm, 2019. "Industrial Energy Use, Management Practices and Price Signals: The Case of Swedish Process Industry," International Journal of Energy Economics and Policy, Econjournals, vol. 9(3), pages 30-45.
    5. Masurel, Enno, 2005. "Use of Patent Information : Empirical Evidence from Innovative SMEs," Serie Research Memoranda 0002, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    6. Barr, Jason & Saraceno, Francesco, 2002. "A computational theory of the firm," Journal of Economic Behavior & Organization, Elsevier, vol. 49(3), pages 345-361, November.
    7. Scott A. Shane & Karl T. Ulrich, 2004. "50th Anniversary Article: Technological Innovation, Product Development, and Entrepreneurship in Management Science," Management Science, INFORMS, vol. 50(2), pages 133-144, February.
    8. Francesco Rizzi & Eleonora Annunziata & Marco Frey, 2018. "The Relationship between Organizational Culture and Energy Performance: A Municipal Energy Manager Level Study," Business Strategy and the Environment, Wiley Blackwell, vol. 27(6), pages 694-711, September.
    9. Inoue, Emiko & Arimura, Toshi H. & Nakano, Makiko, 2013. "A new insight into environmental innovation: Does the maturity of environmental management systems matter?," Ecological Economics, Elsevier, vol. 94(C), pages 156-163.
    10. Stephen J. DeCanio, 2022. "Simple efficiency-distribution models of production, with an application to robotics," SN Business & Economics, Springer, vol. 2(8), pages 1-16, August.
    11. Pismennaya, Anna & Dosorova, Helen & Anfinogentov, Vasiliy, 1999. "Development of Market Relations in Russia: The Impact of the Structure of a Firm," ERSA conference papers ersa99pa216, European Regional Science Association.
    12. Donna Ramirez Harrington, 2013. "Effectiveness Of State Pollution Prevention Programs And Policies," Contemporary Economic Policy, Western Economic Association International, vol. 31(2), pages 255-278, April.
    13. Elmar Kiesling & Markus Günther & Christian Stummer & Lea Wakolbinger, 2012. "Agent-based simulation of innovation diffusion: a review," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 20(2), pages 183-230, June.
    14. Madhu Khanna & George Deltas & Donna Harrington, 2009. "Adoption of Pollution Prevention Techniques: The Role of Management Systems and Regulatory Pressures," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 44(1), pages 85-106, September.
    15. Anderson, Barry & Leib, Jörg & Martin, Ralf & McGuigan, Marty & Muuls, Mirabelle & Wagner, Ulrich J. & de Preux, Laure B., 2011. "Climate change policy and business in Europe: evidence from interviewing managers," LSE Research Online Documents on Economics 47493, London School of Economics and Political Science, LSE Library.
    16. Schäper, Thomas & Jung, Christopher & Foege, Johann Nils & Bogers, Marcel L.A.M. & Fainshmidt, Stav & Nüesch, Stephan, 2023. "The S-shaped relationship between open innovation and financial performance: A longitudinal perspective using a novel text-based measure," Research Policy, Elsevier, vol. 52(6).
    17. Jun Rentschler & Raimund Bleischwitz & Florian Flachenecker, 2018. "On imperfect competition and market distortions: the causes of corporate under-investment in energy and material efficiency," International Economics and Economic Policy, Springer, vol. 15(1), pages 159-183, January.
    18. Masurel, E. & Nijkamp, P., 2009. "Bridging the gap between institutions of higher education and small and medium-size enterprises," Serie Research Memoranda 0037, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    19. Cheng-Wen Lee & Chin Kun Chang, 2020. "A Study of Evaluating Organizational Performance Based on Balanced Scoresheet Viewpoint," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 10(6), pages 1-3.
    20. Ning Nan & Robert Zmud & Emre Yetgin, 2014. "A complex adaptive systems perspective of innovation diffusion: an integrated theory and validated virtual laboratory," Computational and Mathematical Organization Theory, Springer, vol. 20(1), pages 52-88, March.
    21. Margherita Molinaro & Pietro Romano & Gianluca Sperone, 2023. "The organizational side of a disruption mitigation process: exploring a case study during the COVID-19 pandemic," Operations Management Research, Springer, vol. 16(1), pages 1-17, March.
    22. Afia Saleem & Usman Ghani, 2013. "Application of Weisbord's Organizational Diagnosis Model: A Case of Pakistan Banking Industry," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 5(1), pages 1-11, April.
    23. Yong Soo Keong & Partha Sen & Cao Jing, 2024. "An Inquiry into the North-South Management Gap in China," CESifo Working Paper Series 10952, CESifo.

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