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Hierarchical Structure and Search in Complex Organizations

Author

Listed:
  • Jürgen Mihm

    (INSEAD, 77305 Fontainebleau Cedex, France)

  • Christoph H. Loch

    (INSEAD, 77305 Fontainebleau Cedex, France)

  • Dennis Wilkinson

    (Social Computing Lab, HP Labs, Palo Alto, California 94304)

  • Bernardo A. Huberman

    (Social Computing Lab, HP Labs, Palo Alto, California 94304)

Abstract

Organizations engage in search whenever they perform nonroutine tasks, such as the definition and validation of a new strategy, the acquisition of new capabilities, or new product development. Previous work on search and organizational hierarchy has discovered that a hierarchy with a central decision maker at the top can speed up problem solving, but possibly at the cost of solution quality compared with results of a decentralized search. Our study uses a formal model and simulations to explore the effect of an organizational hierarchy on solution stability, solution quality, and search speed. Three insights arise on how a hierarchy can improve organizational search: (1) assigning a lead function that "anchors" a solution speeds up problem solving; (2) local solution choice should be delegated to the lowest level; and (3) structure matters little at the middle management level, but it matters at the front line; front-line groups should be kept small. These results highlight the importance for every organization of adapting its hierarchical structure to its search requirements.

Suggested Citation

  • Jürgen Mihm & Christoph H. Loch & Dennis Wilkinson & Bernardo A. Huberman, 2010. "Hierarchical Structure and Search in Complex Organizations," Management Science, INFORMS, vol. 56(5), pages 831-848, May.
    • Handle: RePEc:inm:ormnsc:v:56:y:2010:i:5:p:831-848
    DOI: 10.1287/mnsc.1100.1148
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    References listed on IDEAS

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