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Organizations and Complexity: Searching for the Edge of Chaos

Author

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  • Tim Carroll

    (Duke University)

  • Richard M. Burton

    (Duke University)

Abstract

Traditional organizational theory advocates increased differentiation and horizontal integration for organizations in unstable environments or with uncertain technologies. This paper seeks to develop a better understanding of the relationship of group structure and the level of interdependency between individuals on group performance under various task complexities. Complexity theory in general, and NK models in particular, are introduced as theoretical frameworks that offer an explanation for group performance. Simulation models are developed, based on the communication network research of Bavelas (1948) and Leavitt (1952), to explore the effects of decentralization and interdependence. The simulation model developed here shows general consistency with previous human subject experiments. However, contrary to predictions, not all decentralized group structures perform well when undertaking complex task assignments. Structures that are highly connected (actors communicating with all others) perform much worse than those with a lower level of connection. Further experiments varying both the number of actors and the degree of interdependence between them find evidence of the “edge of chaos.” This research advances our understanding of organizations beyond earlier models by suggesting that there is an optimal range of interconnectedness between actors or tasks that explains the variation in performance. An intriguing result is that this optimal level of interdependence is fairly low, regardless of the size of the group.

Suggested Citation

  • Tim Carroll & Richard M. Burton, 2000. "Organizations and Complexity: Searching for the Edge of Chaos," Computational and Mathematical Organization Theory, Springer, vol. 6(4), pages 319-337, December.
    • Handle: RePEc:spr:comaot:v:6:y:2000:i:4:d:10.1023_a:1009633728444
    DOI: 10.1023/A:1009633728444
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    References listed on IDEAS

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    1. Anne Y. Ilinitch & Richard A. D'Aveni & Arie Y. Lewin, 1996. "New Organizational Forms and Strategies for Managing in Hypercompetitive Environments," Organization Science, INFORMS, vol. 7(3), pages 211-220, June.
    2. Henk W. Volberda, 1996. "Toward the Flexible Form: How to Remain Vital in Hypercompetitive Environments," Organization Science, INFORMS, vol. 7(4), pages 359-374, August.
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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. Lucio Biggiero & Enrico Sevi, 2009. "Opportunism by cheating and its effects on industry profitability. The CIOPS model," Computational and Mathematical Organization Theory, Springer, vol. 15(3), pages 191-236, September.
    3. Shelley D. Dionne & Hiroki Sayama & Francis J. Yammarino, 2019. "Diversity and Social Network Structure in Collective Decision Making: Evolutionary Perspectives with Agent-Based Simulations," Complexity, Hindawi, vol. 2019, pages 1-16, March.
    4. Lazer, David & Friedman, Allan, 2005. "The Parable of the Hare and the Tortoise: Small Worlds, Diversity, and System Performance," Working Paper Series rwp05-058, Harvard University, John F. Kennedy School of Government.
    5. Laura B. Cardinal & Scott F. Turner & Michael J. Fern & Richard M. Burton, 2011. "Organizing for Product Development Across Technological Environments: Performance Trade-offs and Priorities," Organization Science, INFORMS, vol. 22(4), pages 1000-1025, August.
    6. Raymond E. Levitt, 2004. "Computational Modeling of Organizations Comes of Age," Computational and Mathematical Organization Theory, Springer, vol. 10(2), pages 127-145, July.
    7. Momčilo Kujačić & Nebojša J. Bojović, 2003. "Organizational Design of Post Corporation Structure Using Fuzzy Multicriteria Decision Making," Computational and Mathematical Organization Theory, Springer, vol. 9(1), pages 5-18, May.
    8. Mark E. Nissen, 2007. "Computational experimentation on new organizational forms: Exploring behavior and performance of Edge organizations," Computational and Mathematical Organization Theory, Springer, vol. 13(3), pages 203-240, September.
    9. Friederike Wall, 2015. "Beneficial Effects Of Randomized Organizational Change On Performance," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., vol. 18(05n06), pages 1-23, August.
    10. Jan Thomsen & Raymond E. Levitt & Clifford I. Nass, 2005. "The Virtual Team Alliance (VTA): Extending Galbraith’s Information-Processing Model to Account for Goal Incongruency," Computational and Mathematical Organization Theory, Springer, vol. 10(4), pages 349-372, January.
    11. repec:dau:papers:123456789/2644 is not listed on IDEAS
    12. Stéphane J. G. Girod & Richard Whittington, 2015. "Change Escalation Processes and Complex Adaptive Systems: From Incremental Reconfigurations to Discontinuous Restructuring," Organization Science, INFORMS, vol. 26(5), pages 1520-1535, October.
    13. Biggiero, Lucio & Angelini, Pier Paolo, 2015. "Hunting scale-free properties in R&D collaboration networks: Self-organization, power-law and policy issues in the European aerospace research area," Technological Forecasting and Social Change, Elsevier, vol. 94(C), pages 21-43.
    14. Friederike Wall, 2016. "Agent-based modeling in managerial science: an illustrative survey and study," Review of Managerial Science, Springer, vol. 10(1), pages 135-193, January.
    15. Elio Iannuzzi & Massimiliano Berardi & Sergio Mazzarella, 2013. "L'evoluzione delle crisi finanziarie: tra politiche di rigore ed esigenze di sviluppo," ESPERIENZE D'IMPRESA, FrancoAngeli Editore, vol. 2013(1), pages 79-107.
    16. Kent Wickstrøm Jensen & Dorthe Døjbak Håkonsson & Richard M. Burton & Børge Obel, 2010. "The effect of virtuality on the functioning of centralized versus decentralized structures—an information processing perspective," Computational and Mathematical Organization Theory, Springer, vol. 16(2), pages 144-170, June.
    17. William Martin Tracy & M. V. Shyam Kumar & William Paczkowski, 2013. "Parametric interdependence, learning-by-doing, and industrial structure," Computational and Mathematical Organization Theory, Springer, vol. 19(4), pages 580-600, December.
    18. Stephan Leitner & Friederike Wall, 2015. "Simulation-based research in management accounting and control: an illustrative overview," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 26(2), pages 105-129, August.
    19. Gang Zhang & Ruoyang Gao, 2010. "Modularity and incremental innovation: the roles of design rules and organizational communication," Computational and Mathematical Organization Theory, Springer, vol. 16(2), pages 171-200, June.

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