2013/14 LEM Working Paper Series

The dynamics of organizational structures and performances under diverging distributions of knowledge and different power structures

Giovanni Dosi, Luigi Marengo
authority, power, distributed knowledge

  JEL Classifications
D21, D23, D71

In this work we analyze the characteristics and dynamics of orga- nizations wherein members diverge in terms of capabilities and visions they hold, and interests which they pursue. In particular we examine how different forms of power can achieve coordination among such diverse capabilities, visions and interests while at the same time en- suring control and allowing mutual learning. By means of a simple simulation model of collective decisions by heterogeneous agents, we will examine three different forms of power, ranging from the power to design the organization, to the power to overrule by veto or fiat the others’ decisions, to the power to shape the very preferences of the members of the organization. We study the efficiency of different balances between the three foregoing mechanisms, within a framework in which indeed organizations “aggregate” and make compatible dif- ferent pieces of distributed knowledge, but the causation arrow goes also the other way round: organizations shape the characteristics and distribution of knowledge itself, and of the micro “visions” and judge- ments.
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