Interactions Between Formal and Informal Organizational Networks

Interactions Between Formal and Informal Organizational Networks

Marco Lamieri (Institute for Scientific Interchange Foundation, Italy) and Diana Mangalagiu (Reims Management School - France and Institute for Scientific Interchange Foundation, Italy)
DOI: 10.4018/978-1-60566-256-5.ch020
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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.
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The relation between the organizational architecture and performance has long been of concern to economists (Sah & Stiglitz, 1986; Bolton & Dewatripont, 1994). Their emphasis has been on efficiency, defined as being optimal when interactions are minimized. Traditional economics sees interactions in organizations from an economizing on coordination, transaction or information costs perspective. Interactions are considered as distracting valuable resources (time, attention, energy, equipment, etc.) from productive use itself (Williamson, 1985) and therefore interaction mechanisms are to be minimized. Interactions are seen as “allocative” and are used to coordinate events, functions, businesses, etc. such that these fit together and fit with predefined rules while minimizing the resources consumed to ensure the fit. They are determined by the mode in which the hierarchy and the division of labor are structured and they form an unbroken line from the top managers to the operative employees. As a result, the economics literature on organizations has mostly focused on hierarchies: by connecting N nodes together with the minimum required number of N - 1 links and creating a chain of command that is only L ~ logN links in depth, hierarchies are almost as efficient as possible. Hierarchies require each node to interact directly with, on average, b other nodes where b << N and is generally called the “span of control” (Dodds et al., 2003). Numerous studies studied the optimality of hierarchical organizational networks for exerting control, performing decentralized tasks, making decisions, and accumulating knowledge (Van Zandt, 1998; Hart & Moore, 1999; Garicano, 2000; Visser, 2000).

This traditional economics view on organizational interactions holds true in product manufacturing-oriented organizations, in which the transaction costs are low compared to the production costs, strict hierarchical decomposition of tasks into independent units being possible. But in today’s knowledge intensive organizations, of highly transactional nature (North & Wallis, 1994), strict decomposition is not anymore possible and allocative interactions are not sufficient for explaining organizational performance. In such organizations, in addition to formal interaction of allocative nature, informal relations are important. These informal interactions can be categorized of being “generative” to the extent that they help individuals in organizations to generate new capabilities, gain new knowledge and insight in a way that allow individuals to handle complex situations (Morieux et al., 2005).

In the last decade, a growing attention has been devoted to informal interactions taking place in organizations. Empirical evidence (Nohria, 1992; Johanson, 1999; Cumming, 2004) has shown that in many organizations, informal interactions are even the primary means by which employees find information, solve complex problems and learn how to do their work. Moreover, informal networks existing in an organization and participating actively in the handling of practices can influence the formal, hierarchical design of the organization, leading to a co-evolution between formal and informal organizational networks (Volberda & Lewin, 2003).

Theoretical studies (Zander & Kogut, 1995; Garicano, 2000) have been also devoted to the role played by the informal interactions and network-related mechanisms in the behavior and capabilities of organizations. Most of them are based on the knowledge-based theory of the firm, where organizations are viewed as social communities specializing in efficient knowledge creation and transfer (Zander & Kogut, 1995). In this view, informal interpersonal networks emerge as a major component of the knowledge transfer process. Other studies, such as Uzzi (1997) focus on the association between informal network structure and organizational performance.

Key Terms in this Chapter

Sensing Task: A task that generates useful information when successfully completed. The generated information can be used in a decision task.

Organizational Structure: The set of relationships among organizational members constraining their possible actions. In this chapter we consider communication structures that restrict with whom an organization member can communicate. We consider hierarchical, tree-based structures as well as horizontal structures, namely rings and random structures.

Actor: The human members of the organization. The actors are the entities that are actually executing tasks and are explicitly represented in our model. The actors may be assisted by software personal assistants, which relieve various cognitive and communication constraints.

Decision Task: A task that requires information generated by successfully executing sensing tasks. A decision task cannot be executed until all requisite information has been acquired.

Software Personal aSsistant (SPA): An agent that supports a human user by automating routine individual tasks and facilitating coordination with other members of the organization. The effect of a software personal assistant on its user is to relax various cognitive and communication constraints. To be fully effective, software personal assistants must be aware of the organization in which they are situated.

Primary Task: A task that is not a contingency of any other task. Executing a primary task is the preferred way to achieve an organizational goal, while contingencies are less preferred but allow the organization to cope with failure.

Cognitive Load: The amount of an actor’s cognitive facilities that is required to perform a task or set of tasks. People are inherently limited in the amount of cognitive load they can bear, and thus relieving cognitive load is one of the major goals for a successful software personal assistant design.

Communication Overload: A person’s inability to engage in an excessive number of simultaneous communication acts. Communication overload arises because people have bounded capacities for processing communicated information. This is primarily a problem with synchronous communication.

Task Contingency: A task to be executed in the event another task cannot be successfully completed. Each task has at most one, unique and specific contingency that is known in advance. A contingency may in turn have its own contingency to be executed in event of failure. Contingencies represent pre-planned backup or alternative ways to achieve an organizational goal.

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Editorial Advisory Board
Table of Contents
Liz Sonenberg
Virginia Dignum
Virginia Dignum
Chapter 1
Virgina Dignum
Agent Organization can be understood from two perspectives: organization as a process and organization as an entity. That is, organization is... Sample PDF
The Role of Organization in Agent Systems
Chapter 2
Luciano R. Coutinho, Jaime S. Sichman, Olivier Boissier
In this chapter, we discuss the concepts of agent organization, organizational model, and review some existing organizational models. Before the... Sample PDF
Modelling Dimensions for Agent Organizations
Chapter 3
Jacques Ferber, Tiberiu Stratulat, John Tranier
In this chapter, we stress the importance of thinking a MAS in all its aspects (agents, environment, interactions, organizations, and institutions)... Sample PDF
Towards an Integral Approach of Organizations in Multi-Agent Systems
Chapter 4
Scott A. DeLoach
This chapter introduces a suite of technologies for building complex, adaptive systems. It is based in the multi-agent systems paradigm and uses the... Sample PDF
OMACS: A Framework for Adaptive, Complex Systems
Chapter 5
Christopher Cheong, Michael Winikoff
Although intelligent agents individually exhibit a number of characteristics, including social ability, flexibility, and robustness, which make them... Sample PDF
Hermes: Designing Flexible and Robust Agent Interactions
Chapter 6
Viara Popova, Alexei Sharpanskykh
This chapter introduces a formal framework for modeling and analysis of organizations. It allows representing and reasoning about all important... Sample PDF
A Formal Framework for Organization Modeling and Analysis
Chapter 7
Maksim Tsvetovat
Agent-based approaches provide an invaluable tool for building decentralized, distributed architectures and tying together sets of disparate... Sample PDF
Describing Agent Societies: A Declarative Semantics
Chapter 8
Davide Grossi, Frank Dignum
In this chapter we investigate how organizations can be represented as graphs endowed with formal semantics. We distinguish different dimensions of... Sample PDF
Structural Aspects of Organizations
Chapter 9
Virgina Dignum, Frank Dignum
Organization concepts and models are increasingly being adopted for the design and specification of multi-agent systems. Agent organizations can be... Sample PDF
A Logic for Agent Organizations
Chapter 10
Cristiano Castelfranchi
This chapter presents organizations as a macro-micro notion and device; they presuppose autonomous proactive entities (agents) playing the... Sample PDF
Grounding Organizations in the Minds of the Agents
Chapter 11
Paolo Torroni, Pinar Yolum, Munindar P. Singh, Marco Alberti, Federico Chesani, Marco Gavanelli, Evelina Lamma, Paola Mello
Organizational models often rely on two assumptions: openness and heterogeneity. This is, for instance, the case with organizations consisting of... Sample PDF
Modelling Interactions via Commitments and Expectations
Chapter 12
Gita Sukthankar, Katia Sycara, Joseph A. Giampapa, Christopher Burnett
This chapter discusses the problem of agent aiding of ad-hoc, decentralized human teams so as to improve team performance on time-stressed group... Sample PDF
Communications for Agent-Based Human Team Support
Chapter 13
Bob van der Vecht, Frank Dignum, John-Jules Ch. Meyer
This chapter discusses how autonomous agents can adopt organizational rules into their reasoning process. Agents in an organization need to... Sample PDF
Autonomous Agents Adopting Organizational Rules
Chapter 14
Nicoletta Fornara, Marco Colombetti
The specification of open interaction systems is widely recognized to be a crucial issue, which involves the problem of finding a standard way of... Sample PDF
Specifying Artificial Institutions in the Event Calculus
Chapter 15
Francesco Viganò, Marco Colombetti
Institutions have been proposed to explicitly represent norms in open multi-agent systems, where agents may not follow them and which therefore... Sample PDF
Verifying Organizations Regulated by Institutions
Chapter 16
Mehdi Dastani, Nick A.M. Tinnemeier, John-Jules Ch. Meyer
Multi-agent systems are viewed as consisting of individual agents whose behaviors are regulated by an organizational artifact. This chapter presents... Sample PDF
A Programming Language for Normative Multi-Agent Systems
Chapter 17
Antônio Carlos da Rocha Costa, Graçaliz Pereira Dimuro
This chapter presents the Population-Organization model, a formal tool for studying the organization of open multi-agent systems and its functional... Sample PDF
A Minimal Dynamical MAS Organization Model
Chapter 18
Shaheen Fatima, Michael Wooldridge
This chapter presents an adaptive organizational policy for multi-agent systems called TRACE. TRACE allows a collection of multi-agent organizations... Sample PDF
A Framework for Dynamic Agent Organizations
Chapter 19
Alexander Artikis, Dimosthenis Kaponis, Jeremy Pitt
We have been developing a framework for executable specification of norm-governed multi-agent systems. In this framework, specification is a... Sample PDF
Dynamic Specifications for Norm-Governed Systems
Chapter 20
Marco Lamieri, Diana Mangalagiu
In this chapter we present a model of organization aimed to understand the effect of formal and informal structures on the organization’s... Sample PDF
Interactions Between Formal and Informal Organizational Networks
Chapter 21
Steven Okamoto, Katia Sycara, Paul Scerri
Intelligent software personal assistants are an active research area with the potential to revolutionize the way that human organizations operate... Sample PDF
Personal Assistants for Human Organizations
Chapter 22
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Organizational Self-Design in Worth-Oriented Domains
Chapter 23
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A Formal Petri Net Based Model for Team Monitoring
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