Complexity Theoryand Organization Science

Todd H. ChilesNovember 14, 2001

Intellectual Roots of Complexity Theory:Mathematics and Science

“Mathematical and Scientific Roots of Emergence”Goldstein, 1999, Emergence, 1(1): 55.

Some Historical Roots of and Approaches toComplexity Theory: Economics

Scottish Moral Philosophers•Hume•Smith

Austrian Economics•Menger•Hayek•Lachmann

Increasing Returns Economics•Arthur•David•Krugman

Some Historical Roots of and Approaches toComplexity Theory: Organization Science

Open Systems Theory•Katz & Kahn

Punctuated Equilibrium Theory•Tushman & Romanelli•Gersick

Holographic Brain andFlux & Transformation Metaphors

•Morgan

Emergent Strategy•Mintzberg•Pascale

Normal Accidents•Perrow

Sensemaking•Weick

Improvisation•Weick•Meyer

Knowledge Management•Spender•Tsoukas

Complexity Theory Articles Publishedin Management: Premier Journals

Organization Science•Drazin & Van de Ven. 1992.•Gresov, Haveman & Olivia. 1993.•Thietart & Forgues. 1995.•Cheng & Ven de Ven. 1996.•Polley. 1997.•McKelvey. 1997.•Anderson, Meyer, Eisenhardt, Carley & Pettigrew. 1999.•Morel & Ramanujam. 1999.•Anderson. 1999.•McKelvey. 1999.•Boisot & Child. 1999.•Dooley & Van de Ven. 1999.•Levinthal & Warglien. 1999.•Sterman & Wittenberg. 1999.•Lewin & Volberda. 1999.•Lewin, et. al. 1999.

Administrative Science Quarterly•Brown & Eisenhardt. 1997.

Strategic Management Journal•Levy 1994.•Stacey. 1995.•Bettis & Prahalad. 1996.•Lengnick-Hall & Wolff. 1999.•MacIntosh & MacLean. 1999.

Academy of Management Review•Gersick. 1991.•Ofori-Dankwa & Julian. 2001.

Management Science•Levinthal. 1997.•Rivkin. 2000.

Academy of Management Journal•Browning, Beyer & Shetler. 1995.

Complexity Theory Articles Publishedin Management: Other Journals

Other Management Journals•Harvard Business Review•Academy of Management Executive•Long Range Planning•Journal of Management Inquiry•Human Relations•Journal of Business Venturing•Journal of Business & Entrepreneurship•Scandinavian Journal of Management•British Journal of Management•Journal of Management History•Journal of Organizational Change Management•Journal of Operations Management•Emergence: A Journal of Complexity Issues in Organization & Management

Complexity Theory: NumerousApproaches, One Primary Question

•Fractals•Deterministic Chaos Theory•Self-Organized Criticality•NK Landscapes•Genetic Algorithms; Cellular Automata•Spin Glass; Simulated Annealing•Synergetics

•Catastrophe Theory•System Dynamics•Autogenesis/Autopoiesis•Complex Adaptive Systems•Dissipative Structures•Emergent Evolution•Increasing Returns

Numerous streams of complexity research in management...

One primary question…•How does order emerge in the first place?

The Emergence of Order inSelf-Organizing, Complex Adaptive Systems

“Perhaps the single most important[shift in thinking that complexitytheory provides] is a movement awayfrom explaining why change happensand toward explaining why and howorder emerges in the first place(Stevenson & Harmeling, 1990).”

--Lichtenstein (2000)

Characteristics of Self-Organizing,Complex Adaptive Systems

•A system with many interacting “parts” (i.e., a network) that form a coherent “whole” (i.e., a gestalt)

•Network structures•Holistic structures•Hierarchical structures

•Agents act on “local knowledge” using “simple rules”•Knowledge is heterogeneous, dispersed, limited, and often tacit•No central controller•Agents with schemata

•Individual schemata (“human action”)•Shared schemata (“rule following”--laws, habit, culture, strategy)

Characteristics of Self-Organizing,Complex Adaptive Systems

•Interactions• Interactions give rise to “emergent properties”•Non-linearity•Circular causality and positive feedback loops

•Learning/adaptation by agents•Revision of strategies for action and recombination of the componentparts based on feedback, on new knowledge

•Learn to deal better with an environment of other adaptive agents•Knowledge is not given, but discovered•Competition and cooperation

Characteristics of Self-Organizing,Complex Adaptive Systems

•Far-from-equilibrium processes•Importation of energy into and dissipation of energy by a system isnecessary to maintain a stable, yet disequilibrium, state•“Edge of chaos” is located between regimes of order and chaos; a regioncharacterized by flexibility, improvisation, and the emergence of novelty•Bifurcation points; series of “cascading bifurcations”•Process of achieving an equilibrium in a “multiple equilibria” system;sensitive dependence on initial conditions

•Non-predictability•Specific, long-term outcomes cannot be predicted.•Only “pattern prediction” is possible.•“Explanation of the principle” is the best that can be achieved.

Characteristics of Self-Organizing,Complex Adaptive Systems

•Potential non-optimality•e.g., Light-water nuclear reactors locked-out the technicallysuperior gas-cooled nuclear reactors•e.g., DOS/Windows operating system locked-out the technicallysuperior Mac operating system

•Importance of history•Path-dependence•Eras and epochs•Conjunctural events•Specific historical events, actions and choices

Characteristics of Self-Organizing,Complex Adaptive Systems

•Increasing system complexity/heterogeneity•The “evolution of ever more complex arrangements”•The continual process of adaptation leads to “more variation in thesystem as the adaptive strategies of some agents open up niches forother agents to exploit.”