Hierarchical Structure and Search in Complex Organizations

Jürgen Mihm (), Christoph Loch (), Dennis Wilkinson () and Bernardo A. Huberman ()
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Jürgen Mihm: 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

Management Science, 2010, vol. 56, issue 5, 831-848

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.

Keywords: search; complexity; oscillations; coordination; decentralized problem solving; hierarchy (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (27)

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