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Cited by 901Organizational Management and LeadershipManagement Theory and PracticeManagement and Organizational Studies

The DOI matches its Crossref record; 63 of the 64 references it cites were found in a registry or an index.

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
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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.

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Research works printed but not linked: 8

  1. Anderson P., 1999, Organ. Sci. (Special Issue), 10, 233
  2. Bower J. L., 1970, Managing the Resource Allocation Process
  3. 10.2307/256810 · DOI · Paper page
  4. Holmström B., 1994, Amer. Econom. Rev., 84, 972
  5. Milgrom P. R., 1990, Amer. Econom. Rev., 80, 511
  6. Mintzberg H., 1981, Harvard Bus. Rev., 81, 103
  7. Simon H. A., 1962, Proc. Amer. Philos. Soc., 106, 467
  8. Thompson J. D., 1967, Organizations in Action

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Metadata

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

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