Abstract
We present a general model of a network of interacting individuals, each of whom derives a known, real-valued benefit from each possible dyadic interaction. The model views interactions as knowledge-transfer exchanges that add value to the organization. We use this model to derive interaction patterns within an organization. We assume that the value of dyadic interaction benefits is distributed as a randomly permuted geometric series. Moreover, interactions only add value when a large enough waiting period is observed between interaction attempts. We show that an organization optimized for knowledge transfer has a distribution of interaction frequencies which correlates well with observations. Organizations of differing sizes can have similar optimal structures as long they have similar normalized levels of interdependence between interactions, and distribution of interaction benefit values. This research has implications for the design of communication infrastructure in a growing organization, as well as for the predictive value of modeling organizations at different scales.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Arrow, K.J. (1963), Social Choice and Individual Values. John Wiley and Sons, New York.
Banks, D.L. and K.M. Carley (1996), “Models for Network Evolution, ” Journal of Mathematical Sociology, 21(1/2), 173–196.
Bendor, J., T.M. Moe and K. Shotts (1998), “Recycling the Garbage Can: An assessment of the Research Program, ” Graduate School of Business, Research Paper No. 1392R.
Bonacich, P. (1987), “Power of Centrality: A Family of Measures, ” American Journal of Sociology, 92(5), 1170–1182.
Bonacich, P. and G.W. Domhoff (1981), “Latent Classes and Group Membership, ” Social Networks, 3, 175–196.
Burt, R.S. (1992), Structural Holes: The Social Structure of Competition, Harvard University Press, Cambridge, MA.
Burton, R.M. and B. Obel (1998), Strategic Organizational Diagnosis and Design, 2nd ed. Kluwer Academic Publishers, Boston, MA.
Carley, K.M. (1990), “Group Stability: A Socio-Cognitive Approach, ” Advances in Group Processes, 7, 1–44.
Carley, K.M. (1991), “A Theory of Group Stability, ” American Sociological Review, 56, 331–354.
Carley, K.M. and D. Krackhardt (1996), “Cognitive Inconsistencies and Non-Symmetric Friendship, ” Social Networks, 18, 1–27.
Coase, R.H. (1988), The Firm, the Market and the Law. University of Chicago Press, Chicago.
Cohen, M.D., J.G. March and J.P. Olsen (1972), “A Garbage Can Model of Organizational Choice, ” Administrative Science Quarterly, 17(1), 1–25.
Contractor, F.J. and W. Ra (1998), “Sharing the fruits of Knowledge Transfer, ” Technical Report, 98–10, Carnegie Bosch Institute for Applied Studies in International Management, Pittsburgh, PA.
Contractor, N.S. and E.M. Eisenberg (1990), “Communication Networks and New Media in Organizations, ” in J. Fulk and C. Steinfield (Eds). Organization and Communication Technology. Sage Publications, Newbury Park, CA, Chapt. 7, pp. 143–170.
Davidow, W.H. (1992), The Virtual Corporation: Structuring and Revitalizing the Corporation for the 21st century. Harper Business, New York.
Dibona, C., M. Stone and S. Ockman (Eds.) (1999), Open Sources: Voices from the Open Source Revolution. O'Reilly and Associates, Sebastopol, CA.
Galbraith, J. (1974), “Organization Design: An Information Processing View, ” INTERFACES, 4.
Galbraith, J. (1977), Organization Design. Addison-Wesley, New York.
Hannan, M.T. and J. Freeman (1977), “The Population Ecology of Organizations, ” American Journal of Sociology, 82(5), 929–964.
Harasawa, H. (1994), “A Principal-Agent Model of Governance Structure Analysis for Construction Subcontracting, ” Master's thesis (Engineer Thesis), Standford University.
Huberman, B.A. and T. Hogg (1995), “Communities of Practice, ” Computational and Mathematical Organization, Theory, 1(1), 73–92.
Jin, Y. and R.E. Levitt. (1996), “The Virtual Design Team: A Computational Model of Project Organizations, ” Computational and Mathematical Organization Theory, 2(3), 171–196.
Jin, Y., R.E. Levitt, T.R. Christiansen and J.C. Kunz (1995a), “The Virtual Design Team: A Computer Simulation Framework for Studying Organizational Aspects of Concurrent Design, ” SIMULATION Journal, 64(3), 169–175.
Jin, Y., R.E. Levitt, T.R. Christiansen and J.C. Kunz (1995b), “The Virtual Design Team: Modeling Organizational Behavior of Concurrent Design Teams, ” International Journal of Artificial Intelligence for Engineering Design, Analysis and Manufacturing (AI EDAM), 9(2), 145–158.
Levitt, R.E., J. Thomsen, T. Christiansen, J. Kunz, Y. Jin and C. Nass (1999), “Simulating ProjectWork Processes and Organizations: Toward a Micro-Contingency Theory of Organizational Design, ” Management Science, 45(11), 1479–1495.
Lifschitz, V. (Ed.) (1990), Formalizing Common Sense: Papers by John McCarthy. Ablex Publishing Corp, Norwood, NJ.
Lin, Z. (1994), “A Theoretical Evaluation of Measures of Organizational Design: Interrelationship and Performance Predictability, ” in Computational Organization Theory. Lawrence Erlbaum Associates, Hillsdale, NJ, Chapt. 6, pp. 113–159.
Milgrom, P. and J. Roberts (1992), Economics, Organization and Management. Prentice Hall, Englewood Cliffs, NJ.
Mintzberg, H. (1983), Structure in Fives—Designing Effective Organizations. Prentice Hall.
Nasrallah, W.F., R.E. Levitt and P. Glynn (1998), “Diversity and Popularity in Organizations and Communities, ” Computational and Mathematical Organization Theory, 4(4), 347–372.
Pfeffer, J. (1997), New Directions for Organization Theory: Problems and Prospects. Oxford University Press, New York, NY.
Scott, J. (1991), Social Network Analysis: A Handbook. Sage Publications, London.
Scott, W.R. (1992), Organizations: Rational, Natural and Open Systems. Prentice Hall, Englewood Cliffs, New Jersey.
Thompson, J.D. (1967), Organizations in Action: Social Science Bases of Administrative Theory. McGraw-Hill, New York, NY.
Thomsen, J. (1998), “Virtual Team Alliance (VTA): Modeling the Effects of Goal Incongruency in Semi-routine, Fast-paced Project Organizations, ” Ph.D. Thesis, Stanford University, Department of Civil Engineering. Also published as Det Norske Veritas (DNV) Research Reports DNV962021, DNV962025 and DNV962026.
Wasserman, S. and K. Faust (1994), Social Network Analysis: Methods and Applications. Cambridge University Press, Cambridge, UK.
Williamson, O.E. and S.G. Winters (Eds.) (1991), The Nature of the Firm: Origins, Evolution and Development. Oxford University Press, New York, Oxford.
Zuboff, S. (1988), In the Age of the Smart Machine: The Future of Work and Power. Basic Books, New York.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Nasrallah, W.F., Levitt, R.E. An Interaction Value Perspective on Firms of Differing Size. Computational & Mathematical Organization Theory 7, 113–144 (2001). https://doi.org/10.1023/A:1011352904886
Issue Date:
DOI: https://doi.org/10.1023/A:1011352904886