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Modeling the Performance of Organizational Structures

Author

Listed:
  • Thomas W. Malone

    (Massachusetts Institute of Technology, Cambridge, Massachusetts)

  • Stephen A. Smith

    (University of Santa Clara, Santa Clara, California)

Abstract

We develop models for comparing the performance of coordination structures that appear in a wide variety of systems, including human organizations and computer systems. First, we define four generic structures: product hierarchies, functional hierarchies, centralized markets, and decentralized markets. Then, drawing primarily on queueing models, we rank these structures in terms of three performance measures: production costs, coordination costs, and vulnerability costs. The models show how changes in the values of these performance measures affect the desirabilities of the different structures. Then, we show how these simple relationships between performance measures and the desirabilities of structures are consistent with a surprising range of phenomena, including; (1) major historical shifts in the dominant organizational forms used by American businesses, and (2) the evolution of computing system architectures. Finally, we use the models to suggest the possible future evolution of both human and computer systems.

Suggested Citation

  • Thomas W. Malone & Stephen A. Smith, 1988. "Modeling the Performance of Organizational Structures," Operations Research, INFORMS, vol. 36(3), pages 421-436, June.
    • Handle: RePEc:inm:oropre:v:36:y:1988:i:3:p:421-436
    DOI: 10.1287/opre.36.3.421
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    Citations

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    Cited by:

    1. Marshall Van Alstyne & Erik Brynjolfsson, 2005. "Global Village or Cyber-Balkans? Modeling and Measuring the Integration of Electronic Communities," Management Science, INFORMS, vol. 51(6), pages 851-868, June.
    2. Rudolph, Jenny & Hatakenaka, Sachi & Carroll, John S., 2002. "Organizational Learning from Experience in High-Hazard Industries: Problem Investigation as Off-Line Reflective Practice," Working papers 4359-02, Massachusetts Institute of Technology (MIT), Sloan School of Management.
    3. Kazunari Ishida & Toshizumi Ohta, 2001. "On a Mathematical Comparison between Hierarchy and Network with a Classification of Coordination Structures," Computational and Mathematical Organization Theory, Springer, vol. 7(4), pages 311-330, December.
    4. Biswas, S. & Narahari, Y., 2004. "Object oriented modeling and decision support for supply chains," European Journal of Operational Research, Elsevier, vol. 153(3), pages 704-726, March.
    5. Malone, Thomas W. & Crowston, Kevin., 1993. "The interdisciplinary study of coordination," Working papers 3630-93. CCSTR ; #157., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    6. Albino, Vito & Pontrandolfo, Pierpaolo & Scozzi, Barbara, 2002. "Analysis of information flows to enhance the coordination of production processes," International Journal of Production Economics, Elsevier, vol. 75(1-2), pages 7-19, January.
    7. Marschak, Thomas, 2006. "Organization Structure," MPRA Paper 81518, University Library of Munich, Germany.
    8. Tad Hogg, 1994. "Communities of Practice: Performance and Evolution," Working Papers _004, Xerox Research Park.
    9. Kun Shin Im & Varun Grover & James T. C. Teng, 2013. "Research Note---Do Large Firms Become Smaller by Using Information Technology?," Information Systems Research, INFORMS, vol. 24(2), pages 470-491, June.

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