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Computational organization theory
Carley K., Prietula M. (ed), Lawrence Erlbaum Associates, Inc., Hillsdale, NJ, 1994. Type: Book (9780805814064)
Date Reviewed: Nov 1 1995

The main advantage of simulation models over mathematical models is their ability to capture more of the real world. However, one of the risks of simulations is that they become as complex as the real world--a problem that occurs because the researcher is attempting to incorporate too much of the real world. In the past, simulation models have been built around the study of decision-making processes and have consisted of participants in the organization making decisions in the way that the organization theorists have observed in the real world. This book presents several new approaches, in which the incentive for the simulations comes to a much greater extent from expert systems and artificial intelligence. These new approaches tend to be more complete than the earlier simulations and have been developed as models within which some of the propositions of organization theory can be tested.

This book is organized in 13 interesting chapters. The first chapter discusses the initial results of research to build and test a computer simulation model of information processing and communication in a multidisciplinary engineering design organization. The virtual design team approach is used to simulate the organizational structure. Information processing tools affecting team performance are also covered. Chapter2 addresses the use of simulations to search for novel organizational forms by reproducing some of the mechanics of organizational evolution. Also described in the chapter is the genetic algorithm, which can be used to efficiently search large design spaces. The authors illustrate a simple model of an organization and some preliminary results from using the genetic algorithm. Chapter 3 extensively discusses the task, actors, structure, commitment, communication, and skills models. Chapter 4 provides the extension of the original model of bounded rationality and incorporates the extended model within a general process theory of organizations, referred to as ACT theory. This chapter also presents the assumptions of ACT theory and illustrates the effect of the multiple perspective on the agents’ internal representation of this world (task and social situation) using a slightly more unified theory of organizations gleaned from examining two computational models of organizations. The purpose of chapter 5 is to broaden the previously researched ideas of hierarchical structures as they pertain to informal organizations.

Chapter 6 is organized in four parts. First, the authors describe the stylized organizational designs that are of great interest to researchers in organizational study. Second, they interpret the definitions of organizational measures, calculate these measures, and then examine the interrelationship among them. Next, they evaluate the ability of these measures to predict organizational performance as given by simulation. Finally, the chapter discusses the theoretical implications of these results. The focus of chapter 7 is on the modeling and computational analysis of interaction processes in organizations. Specifically, the authors have examined dynamic processes resulting from reactive behavior, where the agents in an organization react to each other’s actions. Chapter 8 describes a process that incorporates information obtained from the use of the organizational consultant to validate and improve it. The chapter discusses how the validation process improves the underlying knowledge and, hence, the system. Additionally, the authors have reviewed the validation literature, and then presented their own process of learning from the use of the system. The purpose of chapter 9 is threefold. The first section discusses the benefits of using computer simulation as a modeling technique in the behavior field of organization theory. The second section discusses the research that has been conducted in organizational learning. The third section discusses how research work based on computer simulation can be communicated effectively to the larger organizational theory audience.

Chapter 10 introduces the dynamical model of social dilemmas for intentional agents with expectations and beliefs. The authors expand on the notion of structure in decentralized groups. Next, they present the results of computer experiments that show that, in terms of their ability to sustain high levels of cooperation over time, hierarchical structures are superior to flat groups and fluid hierarchies perform better than fixed ones. Chapter 11 reports on three matched sets of computerized double auctions among buyers and sellers with exogenously given redemption value and cost schedules. Chapter 12 utilizes a normative-descriptive approach, combining empirical and analytic efforts, to examine the effects of different goals in a distributed dynamic task processing context. The focus of chapter 13 is on the active part of operational risk management--that is, the assessment of the effect of unexpected real-time events on the planned course of action, the evaluation of alternative courses of action, and the process of selecting the optimal course of action for the period the real-time event is active.

Reviewer:  Dinesh Dave Review #: CR118844 (9511-0847)
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