CoChat
Sign Up
Cited by 901Organizational Management and LeadershipManagement Theory and PracticeManagement and Organizational Studies

Balancing Search and Stability: Interdependencies Among Elements of Organizational Design

Rivkin, Jan W., Siggelkow, Nicolaj·2003·Management Science
DOI 10.1287/mnsc.49.3.290.12740
Open this paper in CoChat — free account

Abstract

We examine how and why elements of organizational design depend on one another. An agent-based simulation allows us to model three design elements and two contextual variables that have rarely been analyzed jointly: a vertical hierarchy that reviews proposals from subordinates, an incentive system that rewards subordinates for departmental or firm-wide performance, the decomposition of an organization's many decisions into departments, the underlying pattern of interactions among decisions, and limits on the ability of managers to process information. Interdependencies arise among these features because of a basic, general tension. To be successful, an organization must broadly search for good sets of decisions, but it must also stabilize around good decisions once discovered. An effective organization balances search and stability. We identify sets of design elements that encourage broad search and others that promote stability. The adoption of elements that encourage broad search typically raises the marginal benefit of other elements that provide offsetting stability. Hence, the need to balance search and stability generates interdependencies among the design elements. We pay special attention to interdependencies that involve the vertical hierarchy. Our findings confirm many aspects of conventional wisdom about vertical hierarchies, but challenge or put boundary conditions on others. We place limits, for instance, on the received wisdom that firm-wide incentives and capable subordinates make top-level oversight less valuable. We also identify circumstances in which vertical hierarchies can lead to inferior long-term performance.

Integrity signals

Registry

Crossref · 10.1287/mnsc.49.3.290.12740

Cites

63 of 63 references verified0 citation errors · 0 not checkable

Statistics

Recomputing p-values needs the paper’s full text.

Claims the paper makes

This paper’s full text isn’t openly available, so its claims and self-check weren’t run. The registry and citation checks still apply.

Cites

Flagged first, then by citations

1 of the 64 references couldn’t be matched to a known paper.

Cited by

Sorted by citations

Related

Authors
Rivkin, J. W., & Siggelkow, N.
Affiliations
  • Harvard University (US)
  • The Wharton School, 2017 Steinberg Hall—Dietrich Hall, Philadelphia, Pennsylvania 19104
ORCID
Siggelkow, Nicolaj
Venue
Management Science
Publisher
Institute for Operations Research and the Management Sciences (INFORMS)
Published
2003-03
Volume
49
Issue
3
Pages
290-311
ISSN
  • 0025-1909 (ISSN-L)
  • 1526-5501
DOI
10.1287/mnsc.49.3.290.12740
OpenAlex
W2129683067
Cited by
900
References
64
Citations by year
2026: 20 · 2025: 23 · 2024: 30 · 2023: 51 · 2022: 32 · 2021: 43 · 2020: 35 · 2019: 39 · 2018: 50 · 2017: 37 · 2016: 40 · 2015: 48 · 2014: 61 · 2013: 68 · 2012: 51
FWCI
44.88
Type
journal article
Language
en
Open access
closed
Locations
  • Management Science (publishedVersion)
  • ScholarlyCommons (University of Pennsylvania) (submittedVersion)
Topics
  • Social Sciences › Business, Management and Accounting › Management of Technology and Innovation › Organizational Management and Leadership
  • Social Sciences › Business, Management and Accounting › Organizational Behavior and Human Resource Management › Management Theory and Practice
  • Social Sciences › Business, Management and Accounting › Organizational Behavior and Human Resource Management › Management and Organizational Studies
Keywords
organizational design, vertical hierarchy, incentive mechanisms, departmentalization, long-term performance, agent-based modeling

About these checks

Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.

Statistics and arithmetic are recomputed, not judged.

Confidence bands are shown only for fields calibrated on our annotated test set. None is calibrated yet, so no band is shown.

What counts as a claim ›How we measure confidence ›How we check this ›

Are you an author, or do you see a problem with this page? Request a review