Interactions Between Formal and Informal Organizational Networks

Abstract

AbstRAct In this chapter we present a model of organization aimed to understand the effect of formal and informal structures on the organization's performance. The model considers the interplay between the formal hierarchical structure and the social network connecting informally the agents emerging while the organization performs a task-set. The social network creation and evolution is endogenous, as it doesn't include any function supposed to optimize performance. After a review of the literature, we propose a definition of performance based on the efficiency in allocating the task of a simulated organization that can be considered as a network-based problem-solving system. We analyze how the emergence of a stable process in decomposing tasks under different market conditions can alleviate the rigidity and the inefficiencies of a hierarchical structure and we compare the performance of different hierarchical structures under variable environment conditions.