WP063: Interaction Value Analysis: When Structured Communication Benefits Organizations
Abstract/Contents
- Abstract
- We present a mathematical model that explains and predicts the value that a management-defined communication structure can add to an organization composed of individuals with universal access to each other. We reduce the problem of optimizing organizational structure to a multiple-player non-cooperative game where players allocate the scarce resource of their attention among potential interaction partners. We investigate the conditions under which the game has a core - i.e., a confluence of individual optima (Nash equilibrium) that is also optimal for any cooperating coalition. Our interpretation is that business environments where these conditions exist do not benefit from strong management control of communication structure. We note that other combinations of conditions in this model fail to yield a core, even though a single stable Nash equilibrium does exist. The difference between aggregate effectiveness at the Nash equilibrium and the maximal feasible aggregate effectiveness is the value that management can provide through enforcing the globally optimum communication regime. The predictions of this simple model about the conditions that favor more or less structured communications agree surprisingly well with accepted organizational contingency theory.
Description
Type of resource | text |
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Date created | December 2000 |
Creators/Contributors
Author | Nasrallah, Walid F. | |
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Author | Levitt, Raymond E. | |
Author | Glynn, Peter |
Subjects
Subject | CIFE |
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Subject | Center for Integrated Facility Engineering |
Subject | Stanford University |
Subject | Centralization |
Subject | Communication |
Subject | Firm Structure |
Subject | Game Theory |
Subject | Interaction Value Analysis |
Subject | Organizational Contingency Theory |
Subject | Queing Theory |
Subject | Social Networks |
Subject | Welfare Economics |
Genre | Technical report |
Bibliographic information
Access conditions
- Use and reproduction
- User agrees that, where applicable, content will not be used to identify or to otherwise infringe the privacy or confidentiality rights of individuals. Content distributed via the Stanford Digital Repository may be subject to additional license and use restrictions applied by the depositor.
Preferred citation
- Preferred Citation
- Nasrallah, Walid F. and Levitt, Raymond E. and Glynn, Peter. (2000). WP063: Interaction Value Analysis: When Structured Communication Benefits Organizations. Stanford Digital Repository. Available at: http://purl.stanford.edu/gk935bz1089
Collection
CIFE Publications
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- Contact
- walid@alum.mit.edu
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