Firm Structure, Search and Environmental Complexity
This paper investigates the relationship between environmental complexity and firm organization. We ask: Given the complexity of the environment, which organizational structure and level of decision making authority optimizes performance of a firm? We assume the information processing organization is arranged hierarchically, but that decisions can be made at different levels, and thus centralization directly relates to the quantity of information used in making a decision. We model the external environment as a modified NK landscape. Via simulations, we explore which type of organizational structure and level of decision making maximizes firm profits, given the complexity of the environment.
|Date of creation:||Oct 2005|
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