Organizational Design Problem Research Articles

Collusion, Shading, and Optimal Organization Design

Abstract We introduce a behavioral contract theory idea, “shading” (Hart and Moore (2008). “Contracts as Reference Points.” Quarterly Journal of Economics 123 (1): 1–48)) as a component of ex-post haggling (addressed by Coase (1937. “The Nature of the Firm.” Economica 4 (16): 386–405) and Williamson (1975. Markets and Hierarchies: Analysis and Antitrust Implications. New York: Free Press)) into the collusion model à la Tirole (1986. “Hierarchies and Bureaucracies: On the Role of Collusion in Organizations.” Journal of Law, Economics, and Organization 2: 181–214, 1992. “Collusion and the Theory of Organizations.” In Advances in Economic Theory: The Sixth World Congress, edited by J. J. Laffont. Cambridge: Cambridge University Press), thereby constructing a new model of hierarchical organization. By integrating the two ideas, i.e. collusion and shading, we enrich the existing collusion model, thereby obtaining a new result for Collusion-proof versus Equilibrium Collusion. The basic idea is that the increase in shading pressure strengthens the incentive for collusion, thereby making it difficult to implement collusion-proof incentive schemes, which leads to the Equilibrium Collusion. In addition, we also provide a micro-foundation for ex-post haggling costs, where we view rent-seeking associated with collusive behavior and ex-post haggling generated from aggrievement and shading as the two sources of the costs. This model is used to examine the optimal organizational design problem as an optimal response to the trade-off between gross total surplus and ex-post haggling costs, and to take a step further the idea of efficient organization design (Milgrom (1988. “Employment Contracts, Influence Activities and Efficient Organization Design.” Journal of Political Economy 96: 42–60)). We believe that our model could help provide a deep understanding of resource allocation and decision processes in hierarchical organizations.

Analysis of Engineering Structure Design and Management Mode of Lihuayi Group Media Center

Engineering project management is a new thing in the field of engineering construction. It is a management model strongly advocated by the state. It conforms to the objective requirements of the socialist market economy and is conducive to optimizing the allocation of resources and achieving the minimum investment and maximum output of the project. But any management model can only play its role if it is used effectively in practice. This article takes the Lihuayi Group Media Center as an example, and introduces the main contents of the theater structure designing, including structural selection, floor designing, roofing beam designing, cantilevered building designing, stage craft designing and other design points. Combined with the above design points, the design analysis method and conclusion are proposed for typical components of the theater structure, research on the organizational structure design problem under the management mode which can provide practical reference for similar engineering design.

The science of organizational design: fit between structure and coordination

Organization design is a major factor determining an organization’s performance and how the people work together in these organizations. In the paper, we argue that designing organizations should be scientific-based and forward-looking. This raises challenges in designing organizations in contexts and situations that are new and have not been seen before. Experimentation of what is and what might be is the basis for exploring and examining what makes a good science for organizational design. Experimentation permits us to examine what might be for organization designs, which are not well understood or may not exist yet. Collaborative communities, new ventures, agile organizations, and temporary organizations are examples; experimentation permits us explore and examine what is and what might be and to examine the organizational design problem and perform experiments to understand the relationship between structure and coordination mechanisms of information, communications, decisions, trust, and incentives—the basis for the multi-contingency theory of organizational design.An organizational design must specify the fit between the structure of division of tasks in the organization with its coordination, or how to make these tasks work in concert. These tasks can be interdependent and uncertain. To design good organizations, we need empirical evidence about what is and exploration about what might be; we need a good theoretical basis for being able to generalize our knowledge. To illustrate our point, we examine two experiments on the classic M-form hypothesis—a computer simulation that examines coordination, organization structure, and interdependency and a laboratory experiment that examines the effect of incentives on opportunism and performance. Together, we find that the M-form is a robust organizational design, but with contingent conditions.Finally, we discuss how observation and experimentation together is the foundation for the development of scientific-based theory of organizational design.

Organizational-technological decisions in construction based on neural network models

Increasing the quality of organizational and technological solutions in construction is one of the main tasks facing the construction industry. The actual methods of solving the problem of setting organizational and technological design are directly related to the integration of specialized software in the planning and design of construction projects, especially for unique, complex projects, projects implemented in tight time and construction sites in the current urban development. The existing need to process a significant amount of information at short intervals and to link design decisions to the dynamic environment of the construction site is not an easy task, but a realizable one. Within the framework of the research work carried out at the department of MGSU, the expediency of applying operational assessments of the parameters of organizational and technological solutions based on mathematical methods has been established. The proposed method for forecasting and evaluating the integral parameters of design solutions is based on a neural network model, the method used involves the formation of a training matrix comprising key indicators of implemented (pilot) ones.

Multiagent Metareasoning through Organizational Design

We formulate an approach to multiagent metareasoning that uses organizational design to focus each agent's reasoning on the aspects of its local problem that let it make the most worthwhile contributions to joint behavior. By employing the decentralized Markov decision process framework, we characterize an organizational design problem that explicitly considers the quantitative impact that a design has on both the quality of the agents' behaviors and their reasoning costs. We describe an automated organizational design process that can approximately solve our organizational design problem via incremental search, and present techniques that efficiently estimate the incremental impact of a candidate organizational influence. Our empirical evaluation confirms that our process generates organizational designs that impart a desired metareasoning regime upon the agents.

Strategic upfront marketing channel integration as an entry barrier

This paper investigates an organizational design problem concerning whether duopolistic firms competing in a product market should vertically integrate or separate their marketing channels in a dynamic noncooperative game setting. Previous operational research models have shown that the separation of the marketing channel with the adoption of a two-part tariff contract is the dominant strategy compared with integration for each firm if the two firms face retail price competition, and thereby constitutes the subgame perfect Nash equilibrium (SPNE). Contrary to this previous insight, this paper demonstrates that if exogenous parameters that characterize fixed costs, product substitutability, and a demand function fall into a specific region, marketing channel integration dominates the separation strategy when one of the two firms is the incumbent firm while the other is a potential entrant. In other words, the well-known result in the price-setting game can be reversed when we take entry threats into consideration. Specifically, we show that upfront vertical integration of the marketing channel enables the incumbent to deter the entry of the potential competitor and to monopolize the market in the SPNE. This result has operational implications for a firm confronting the threat of potential rivals entering the market, in that the firm can use this apparently inferior strategy as a commitment device, which creates a virtual entry barrier.

Designing Organizations for Dynamic Fit: System Stability, Maneuverability, and Opportunity Loss

Fit represents a central concept for organizational design, but extant research maintains a static focus on fit, a focus that is incommensurate with the fundamentally dynamic nature of organizations and their environments. Most key organizational environments are inherently dynamic; hence, the corresponding organizational designs required for fit are necessarily dynamic too. The problem is, the dynamics of fit are not addressed well by extant theory in organization and management sciences. Alternatively, organizations can be viewed as systems of purposeful design, and designing organizations to maintain fit and respond to dynamic environments over time may be informed well by theory and practice in engineering fields where such design is well established. In this paper, we abstract to the level of airplane design, and we utilize the dynamical language and integrated system of concepts, definitions, and interrelationships from the engineering field Aerodynamics to extend organization and management sciences and address the problem of organizational design in a dynamic context. We begin with a focused summary of the literature regarding the nature of organizational fitness. We then outline a conceptual model adapted to organizational design from Aerodynamics, and we summarize the key aerodynamics concepts stability and maneuverability to inform our conceptualization in terms of both airplane and organization design. This paper enables us to articulate a set of propositions and measures that form a basis for empirical testing. This paper also reveals important, dynamic organizational design tradeoffs and implications, and it shows how such conceptualization can elucidate new insights via comparison with and extension to extant theory.

Efficient structure of organization with heterogeneous workers

Abstract This paper studies the problem of organizational design in a setting where workers differ in their abilities and every worker has to be monitored to prevent shirking. The need for monitoring workers generates a hierarchical structure in an organization, which can be represented as a rooted tree. The value of an organization is determined by the wage cost, the total number of productive tasks carried out, and the length of the chain of supervision in the organizational hierarchy. In this setting, we construct and characterize an efficient structure of hierarchy which maximizes the value of the organization. In addition, we show that a hierarchy with an optimal size has the form of a balanced rooted tree.

Purchasing as an organizational design problem: the case of non‐product‐related items and services

This paper discusses the problems and challenges that arise if a firm tries to concentrate purchasing activities in a separate organisational unit. For a variety of reasons, only a – small – part of all purchasing activities in an organisation is actually carried out by a purchasing department or a specialist. In particular, the purchasing of so‐called non‐product‐related (NPR) items and services often takes place without the involvement of a purchasing department. In addition, despite the sometimes huge savings that reportedly are possible by involving a purchasing department, many managers and boards pay only modest attention to such opportunities. In this paper, a conceptual model is proposed that serves, in particular, to explain the Purchasing department’s limited and problematic involvement in a firm’s tactical NPR‐purchasing activities. Based on these explanations and results from a small empirical study, we draw conclusions and formulate implications for managers and purchasing specialists. Research implications are formulated as well.

A Configurational Perspective on Key Account Management

Most firms struggle with the challenge of managing their key customer accounts. There is a significant gap between the importance of this organizational design problem in practice and the research attention paid to it. Sound academic research on key account management (KAM) is limited and fragmented. Drawing on research on KAM and team selling, the authors develop an integrative conceptualization of KAM and define key constructs in four areas: (1) activities, (2) actors, (3) resources, and (4) approach formalization. Adopting a configurational perspective to organizational research, the authors then use numerical taxonomy to empirically identify eight prototypical KAM approaches on the basis of a cross-industry, cross-national study. The results show significant performance differences among the approaches. Overall, the article builds a bridge between marketing organization research and relationship marketing research.

Academic Planning and Organizational Design: Lessons From Leading American Universities

AbstractThe emerging competitive environment of higher education, both within and between countries, is requiring universities in Europe and other pans of the world to emulate American institutions by becoming corporate entities with an independent capacity to make strategic choices among academic programmes and activities. A number of the leading American universities have developed comprehensive planning processes that offer suggestive guidance for managing in this new environment. These processes have emphasized: clarifying and articulating norms essential to the legimacy of planning; grouping and consolidating functions; promoting reciprocal communication; encouraging the development of a planning capacity within each strategic unit; and increasing direct communication and the sharing of information among members of the academic community. Essentially these universities have conceived of comprehensive planning as a problem of organizational design, systematically seeking means of promoting integration in a highly differentiated organization. The specific mechanisms by which this integration has been accomplished are reviewed.

Impacts of information technology on organizational size and shape: Control and flexibility effects

We argue that the study of information technology (IT) impacts on organizations has been hindered by the shortage of formal models from which empirically testable implications of such impacts can be derived. This article demonstrates the feasibility and usefulness of this approach by constructing and analyzing optimization models of the organizational design problem for a restricted class of hierarchical organizations. The literature suggests that two organizational characteristics likely to be affected by IT are organizational “flexibility”; and the nature of organizational control problems. Thus, first, a particular concept of flexibility is defined and parameterized. Second, organizational design is formalized as an optimization problem having parameters for flexibility and control effects. Third, probable effects of four broad classes of IT on the model's parameters are spelled out and then analyzed via comparative statics and numerical experiments. One general result is that some types of IT impacts ...

A strategy and desiderata for organizational design

This is the first of a three-part series of papers on ‘A strategy and its application for organizational design’. The problem of organizational design is introduced and a strategy is proposed for improving the theory of group structures by means of organizational design. Thirteen desiderata for judging the process and results of organizational design methodologies are presented with commentary. There is an appendix which briefly summarizes the conceptual framework for a theory of organizational structures.

A dynamic model for the headquarters-subsidiary relationship in MNCs

A simple dynamic model has been constructed to describe the headquarters-subsidiary relationship in multinational corporations (MNCs). This model formulates the organizational design problem as a large scale linear-quadratic problem whose solution process within a two level structure describes the evolution of the control which headquarters exercises over subsidiaries. The model takes into account most of the qualitative literature which considers the HQ-subsidiary relationship as a dynamic phenomenon. It has the advantage that it is in an easily manipulable form and can therefore be used to answer many more questions than is the case with the qualitative models.

Marketing management, its environment, and information processing: a problem of organizational design

The marketing literature has overlooked the problem of designing optimal organizational structures for marketing management. The study of this problem is crucial and pressing. Some relationships are proposed between the information generated by the market environment and the ability of the organization of a marketing department to process this information. Insights and opportunities for future conceptual and empirical work are provided.