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Organizational Structures and Exchange Processes

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  • Norman P. Hummon

Abstract

Formal organizations have a division of labor and some form of co‐ordination. This paper explores how these social structures could be generated by an exchange process that governs work flow through an organization. Specifically, the exchange process controls how work tasks are assigned and carried out, and how members receive rewards for participating in a work group of the organization. A discrete‐event simulation model is used to explore how the exchange process generates division of labor and co‐ordination networks. The model contains members, called bureaucrats, with two kinds of skills: skill at referring work to others; and skill in completing work tasks. Both kinds of skills are distributed differentially across bureaucrats. Two types of rational exchange are explored: independent exchange and pooled exchange. For independent exchange, rewards go the bureaucrat who completes the task; in pooled exchange rewards are shared with the bureaucrat who referred the task. Both exchange processes generate a division of labor in a work group, with pooled exchange exhibiting the most pronounced division of labor. Also, pooled exchange leads to more efficient processing of work than independent exchange.

Suggested Citation

  • Norman P. Hummon, 1993. "Organizational Structures and Exchange Processes," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 2(4), pages 235-246, December.
    • Handle: RePEc:wly:isacfm:v:2:y:1993:i:4:p:235-246
    DOI: 10.1002/j.1099-1174.1993.tb00045.x
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    Cited by:

    1. Gary V. Howorka & Lorien A. Anderson & K. Michael Goul & Michael Hine, 1995. "A Computational Model of Coordination for the Design of Organizational Decision Support Systems," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 4(1), pages 43-70, March.

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