Complexity theory and organizations

Complexity theory and organizations, also called complexity strategy or complex adaptive organization, is the use of Complexity theory in the field of strategic management and organizational studies.

Overview

Complexity theory has been used extensively in the field of strategic management and organizational studies. It is used in these domains for understanding how organizations or firms adapt to their environments. The theory treats organizations and firms as collections of strategies and structures. When the organization or firm shares the properties of other complex adaptive systems – which is often defined as consisting of a small number of relatively simple and partially connected structures – they are more likely to adapt to their environment and, thus, survive. Complexity-theoretic thinking has been present in strategy and organizational studies since their inception as academic disciplines.

Complex adaptive systems (CAS) are contrasted with ordered and chaotic systems by the relationship that exists between the system and the agents which act within it. In an ordered system the level of constraint means that all agent behaviour is limited to the rules of the system. In a chaotic system the agents are unconstrained and susceptible to statistical and other analysis. In a CAS, the system and the agents co-evolve; the system lightly constrains agent behaviour, but the agents modify the system by their interaction with it.

CAS approaches to strategy seek to understand the nature of system constraints and agent interaction and generally takes an evolutionary or naturalistic approach to strategy.

Early research

Early strategy and organizational theorists emphasized complexity-like thinking including:

• Herbert Simon's interest in decomposable systems and computational complexity.
• Karl Weick's loose coupling theory and interest in causal dependencies
• Burns and Stalker's contrast between organic and mechanistic structures
• Charles Perrow's interest in the link between complex organization and catastrophic accidents
• James March's contrast between exploration and exploitation, which owes a debt to complexity theorist John Holland.

Later research

More recently work by organizational scholars and their colleagues have added greatly to our understanding of how concepts from the complexity sciences can be used to understand strategy and organizations. The work of Dan Levinthal, Jan Rivkin, Nicolaj Siggelkow, Kathleen Eisenhardt, Nelson Repenning, Phil Anderson and their research groups have been influential in their use of ideas from the complexity sciences in the fields of strategic management and organizational studies. Much of this later research integrates computer simulation and organizational studies.

Further reading

• Anderson, P. 1999. Complexity Theory and Organization Science Organization Science. 10(3): 216–232.
• Axelrod, R. A., & Cohen, M. D., 2000. Harnessing Complexity: Organizational Implications of a Scientific Frontier. New York: The Free Press
• Yaneer Bar-Yam (2005). Making Things Work: Solving Complex Problems in a Complex World. Cambridge, MA: Knowledge Press
• Beautement, P. & Broenner, C. 2010. Complexity Demystified: A Guide for Practitioners. Axminster: Triarchy Press
• Brown, S. L., & Eisenhardt, K. M. 1997. The Art of Continuous Change: Linking Complexity Theory and Time-paced Evolution in Relentlessly Shifting Organizations. Administrative Science Quarterly, 42: 1–34
• Burns, S., & Stalker, G. M. 1961. The Management of Innovation. London: Tavistock Publications
• Davis, J. P., Eisenhardt, K. M., & Bingham, C. B. 2009. Optimal Structure, Market Dynamism, and the Strategy of Simple Rules. Administrative Science Quarterly, 54: 413–452
• De Toni, A.F., Comello, L., 2010. Journey into Complexity. Udine: Lulu Publisher
• Gell-Mann, M. 1994. The Quark and the Jaguar: Adventures in the Simple and the Complex. New York: WH Freeman
• Kauffman, S. 1993. The Origins of Order. New York, NY: Oxford University Press.
• Levinthal, D. 1997. Adaptation on Rugged Landscapes. Management Science, 43: 934–950
• March, J. G. 1991. Exploration and Exploitation in Organizational Learning. Organization Science, 2(1): 71–87
• McKelvey, B. 1999. Avoiding Complexity Catastrophe in Coevolutionary Pockets: Strategies for Rugged Landscapes. Organization Science, 10(3): 249–321
• McMillan, E. 2004 Complexity, Organizations and Change. Routledge.ISBN 041531447X Hardback. ISBN 041539502X Paperback
• Moffat, James. 2003. Complexity Theory and Network Centric Warfare.
• Perrow, C. Complex Organizations: A Critical Essay Scott, Forseman & Co., Glenville, Illinois
• Rivkin, J., W. 2000. Imitation of Complex Strategies. Management Science, 46(6): 824–844
• Rivkin, J. and Siggelkow, N. 2003. Balancing Search and Stability: Interdependencies Among Elements of Organizational Design. Management Science, 49, pp. 290–311
• Rudolph, J., & Repenning, N. 2002. Disaster Dynamics: Understanding the Role of Quantity in Organizational Collapse. Administrative Science Quarterly, 47: 1–30
• Schilling, M. A. 2000. Toward a General Modular Systems Theory and its Applicability to Interfirm Product Modularity. Academy of Management Review, 25(2): 312–334
• Siggelkow, S. 2002. Evolution toward Fit. Administrative Science Quarterly, 47, pp. 125–159
• Simon, H. 1996 (1969; 1981) The Sciences of the Artificial (3rd Edition) MIT Press
• Smith, Edward. 2006. Complexity, Networking, and Effects Based Approaches to Operations] by Edward
• Snowden, D.J. Boone, M. 2007. "A Leader's Framework for Decision Making". Harvard Business Review, November 2007, pp. 69–76.
• Weick, K. E. 1976. Educational Organizations as loosely coupled systems. Administrative Science Quarterly, 21(1): 1–19

See also

• Complex adaptive system
• Complex system
• Complexity
• Complexity theory (disambiguation)
• Cynefin Centre for Organisational Complexity
• The Santa Fe Institute
• The New England Complex Systems Institute