A Relational Approach to Organization Design

Abstract

The paper criticizes the currently dominant view of organization forms as “discrete alternatives” and “coherent” set attributes, and proposes a more refined and micro‐analytic view of organization forms as particular combinations of coordination mechanisms and rights allocations. This view is relevant for understanding and devising “new” forms and proposing solutions for governing the composite and fast changing systems of today. The view is “relational” as it offers a procedure for devising “superior” configurations as combinations—relations between organizational components—in a quasi‐continuous space of possibilities. The approach is sustained by the quantitative methods of network analysis as applied to relations among firm's resources and activities. Theoretically, the approach revisits organization design, integrating classic organization theory tenets with the new inputs provided by organizational economics. Substantively, it is argued that a mix of much differentiated coordination mechanisms is usually superior to the codified, “packaged”, allegedly “coherent”, forms of organization. The procedure presented in the paper is applied to a field experiment in a medium size firm.1 1. The initial idea of network‐analytic, relational design was originally presented in a paper by the authors at the 1998 EGOS Colloquium, in Maastricht, the Netherlands. A development of the framework was presented as a keynote presentation at the LINK (Learning, Incentives and Knowledge) Project 2000 Annual Conference at Copenhagen Business School. In the present paper, the model of interdependence and coordination has been substantially revised and stylized, leading to formulate a new model of optimal coordination. The case study has been enriched and completed with new data gathering activities in spring 2005.