The Dual Challenge of Search and Coordination for Organizational Adaptation: How Structures of Influence Matter

Özgecan Koçak (), Daniel A. Levinthal () and Phanish Puranam ()
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Özgecan Koçak: Goizueta Business School, Emory University, Atlanta, Georgia 30322
Daniel A. Levinthal: Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104
Phanish Puranam: Strategy, INSEAD, Singapore 138676, Singapore

Organization Science, 2023, vol. 34, issue 2, 851-869

Abstract: Organizations increasingly need to adapt to challenges in which search and coordination cannot be decoupled. In response, many have experimented with “agile” and “flat” designs that dismantle traditional forms of hierarchy to harness the distributed knowledge of specialized individuals. Despite the popularity of such practices, there is considerable variation in their implementation as well as conceptual ambiguity about the underlying premise. Does effective rapid experimentation necessarily imply the repudiation of hierarchical structures of influence? We use computational models of multiagent reinforcement learning to study the effectiveness of coordinated search in groups that vary in how they influence each other’s beliefs. We compare the behavior of flat and hierarchical teams with a baseline structure without any influence on beliefs (a “crowd”) when all three are placed in the same task environments. We find that influence on beliefs—whether it is hierarchical or not—makes it less likely that agents stabilize prematurely around their own experiences. However, flat teams can engage in excessive exploration, finding it difficult to converge on good alternatives, whereas hierarchical influence on beliefs reduces simultaneous uncoordinated exploration, introducing a degree of rapid exploitation. As a result, teams that need to achieve agility (i.e., rapid satisfactory results) in environments that require coordinated search may benefit from a hierarchical structure of influence—even when the apex actor has no superior knowledge, foresight, or capacity to control subordinates’ actions.

Keywords: organizational learning; organization design; computer simulations; computational experiments (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ororsc:v:34:y:2023:i:2:p:851-869

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