An Efficient Frontier in Organization Design: Organizational Structure as a Determinant of Exploration and Exploitation

Felipe A. Csaszar ()
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Felipe A. Csaszar: Stephen M. Ross School of Business, University of Michigan, Ann Arbor, Michigan 48109

Organization Science, 2013, vol. 24, issue 4, 1083-1101

Abstract: This paper develops a parsimonious process-level theory that connects organizational structure to exploration and exploitation. Toward this end, it develops a mathematical model of organizational decision making that combines an information processing approach in the spirit of Sah and Stiglitz [Sah RK, Stiglitz JE (1986) The architecture of economic systems: Hierarchies and polyarchies. Amer. Econom. Rev. 76(4):716–727] with elements from signal detection theory. The model is first used to explore a “design space” of organizations and identify trade-offs and dominance relationships among alternative organization designs. The paper then studies open questions in the organization design literature, such as the extent to which exploration and exploitation can be produced by one organization and what is the effect of organization size on exploration. More broadly, this research speaks to calls for the introduction of more process-level explanations in the organizations literature. The paper concludes with testable hypotheses and managerially relevant insights.

Keywords: organization design; organizational decision making; omission and commission errors; exploration and exploitation; ambidexterity (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (35)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ororsc:v:24:y:2013:i:4:p:1083-1101

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