Enterprise design through complex adaptive systems and efficiency measurement

Abstract

Managerial policies affect enterprise operations facilitating or impeding the achievement of goals. Enterprises can operate individually or might also be part of a group of interconnected enterprises. For an enterprise operating as part of a (de)centralized group of enterprises with a similar or complementary mission and under the same or different ownership, the coordination of decisions and actions is important. Using the concept of network as an arrangement of interconnected nodes, this paper deals with enterprises as the members of a network, and with enterprise transactions as the connections among its members. We consider coordination exhibiting connectivity, feedback, and adaptation. These features are not only typical of enterprise networks, but also of complex adaptive systems (CAS). By considering enterprise networks as CAS, we study managerial policies that affect the coordination among the members of enterprise networks and the subsequent effect on technical efficiency both at the individual member enterprise and network levels. To approximate the effects of coordination-driven managerial policies, we consider flocking behavior from natural ecosystems, which the CAS literature studies, as a proxy for managerial policies. We simulate the relationships between managerial policies and technical efficiency in an enterprise network of deregulated power plants through an agent-based model. Experimental results inform when and how managerial policies enhance the coordination among network members and allow for the investigation of the relationships that exist between individual decisions and collective influences. These relationships result in an emergent goal seeking network behavior with respect to the goal of achieving technical efficiency.