Handbook of Economic Organization
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Handbook of Economic Organization

Integrating Economic and Organization Theory

Edited by Anna Grandori

This comprehensive and groundbreaking Handbook integrates economic and organization theories to help elucidate the design and evolution of economic organization. Economic organization is regarded both as a subject of inquiry and as an emerging disciplinary field in its own right, integrating insights from economics, organization theory, strategy and management, economic sociology and congnitive psychology. The contributors, who share this integrated approach, are distinguished scholars at the productive peak in their fields. Each original, state-of-the art chapter not only addresses foundational issues, but also identifies key issues for future research.
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Chapter 11: Interdependence and organization design

Phanish Puranam and Marlo Raveendran

Extract

The division of labor is a defining property of organizations. This implies that interdependence and integration are inevitable features, as the results of partitioned efforts must somehow be integrated back. Indeed, much of the literature on organization design rests on the premise that organizational structures ‘solve’ the problems of cooperation and coordination that arise when integrating the efforts of interdependent actors – with varying degrees of success. In this chapter we review the diverse conceptualizations of interdependence as well as the mechanisms by which interdependence is managed, to demonstrate the unity of their underlying analytical structure. We also highlight the point that the same basic ideas can be applied at multiple levels of aggregation – that interdependence between individuals, groups, departments and firms can be conceptualized and analyzed using the same tools. Indeed, this ‘fractal’ nature of interdependence principles is a basis for optimism regarding the construction of a science of organization design. We conclude by outlining what we see as opportunities for further research into the links between interdependence and organization design.

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