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Abstract
Complex organizations exhibit surprising, nonlinear behavior. Although organization scientists have studied complex organizations for many years, a developing set of conceptual and computational tools makes possible new approaches to modeling nonlinear interactions within and between organizations. Complex adaptive system models represent a genuinely new way of simplifying the complex. They are characterized by four key elements: agents with schemata, self-organizing networks sustained by importing energy, coevolution to the edge of chaos, and system evolution based on recombination. New types of models that incorporate these elements will push organization science forward by merging empirical observation with computational agent-based simulation. Applying complex adaptive systems models to strategic management leads to an emphasis on building systems that can rapidly evolve effective adaptive solutions. Strategic direction of complex organizations consists of establishing and modifying environments within which effective, improvised, self-organized solutions can evolve. Managers influence strategic behavior by altering the fitness landscape for local agents and reconfiguring the organizational architecture within which agents adapt.
(Complexity Theory; Organizational Evolution; Strategic Management)
Since the open-systems view of organizations began to diffuse in the 1960s, complexity has been a central construct in the vocabulary of organization scientists. Open systems are open because they exchange resources with the environment, and they are systems because they consist of interconnected components that work together. In his classic discussion of hierarchy in 1962, Simon defined a complex system as one made up of a large number of parts that have many interactions (Simon 1996). Thompson (1967, p. 6) described a complex organization as a set of interdependent parts, which together make up a whole that is interdependent with some larger environment.
Organization theory has treated complexity as a structural variable that characterizes both organizations and their environments. With respect to organizations, Daft (1992, p. 15) equates complexity with the number of activities or subsystems within the organization, noting that it can be measured along three dimensions. Vertical complexity is the number of levels in an organizational hierarchy, horizontal complexity is the number of job titles or departments across the organization, and spatial complexity is the number of geographical locations. With respect to environments, complexity is equated with the number of different items or elements that must be dealt with simultaneously by the organization (Scott...