Complexity and organizational architecture

This paper examines how features of organizational architecture, with organizations whose members screen projects, affect organizational screening performance. The paper explores consequences for organizational design of a theorem (attributed to Von Neumann by Moore and Shannon) on how to build reliable networks using unreliable components. The paper examines general properties of committee decision making and shows the superiority of committees with respect to composition, that is when each member of organization is replaced by a replica of the entire organization. The paper links with the modern Condorcet Jury Theorem literature. It also shows that organizational screening performance is sigmoid in individual screening performance for hierarchies of polyarchies and for polyarchies of hierarchies. The supermodularity and sub-modularity properties of organizations’ screening performance allows us to link with results from the theory of teams. When agents are heterogeneous, hierarchies favor sorting and polyarchies favor mixing.

► The model examines architectural features of organizations. ► Organizations improve upon individuals, if they are sigmoid in individual performance. ►Hierarchies made up of components that are polyarchies do satisfy sigmoidicity. ►Polyarchies made up of components that are hierarchies also satisfy sigmoidicity. ► The paper links with the theory of teams and the Condorcet Jury Theorem literature.