View source for Complexity theory and organizations

{{short description|Application of complexity theory to strategy}}
{{Use American English|date=May 2021}}
{{Use dmy dates|date=May 2021}}
{{about|the application of [[complex system|complexity science]] to strategy|its application to the problems of economics|Complexity economics|other uses|Complexity theory (disambiguation)}}

'''Complexity theory and organizations''', also called '''complexity strategy''' or '''complex adaptive organizations''', is the use of the study of [[Complex systems|complexity systems]] in the field of [[strategic management]] and [[organizational studies]].<ref name=CAS-T-32/><ref name=CAS-T-33/><ref name=CAS-T-31/><ref name=CAS-T-29/> It draws from research in the natural sciences that examines uncertainty and [[non-linearity]].<ref name="Grobman, Gary M 2005">{{cite journal|author=Grobman, Gary M.|title=Complexity Theory: a new way to look at organizational change|journal=Public Administration Quarterly|year=2005|url=http://www.complexityforum.com/members/Grobman%202005%20Complexity%20theory.pdf|volume=29|issue=3|pages=351–384 |doi=10.1177/073491490502900305 |access-date=2016-07-10|archive-url=https://web.archive.org/web/20160807100905/http://www.complexityforum.com/members/Grobman%202005%20Complexity%20theory.pdf|archive-date=2016-08-07|url-status=dead}}</ref> Complexity theory emphasizes interactions and the accompanying [[feedback]] loops that constantly change systems. While it proposes that systems are [[predictability|unpredictable]], they are also constrained by order-generating rules.<ref name="Burnes, Bernard 2005">{{cite journal|author=Burnes, Bernard|title=Complexity theories and organizational change|journal=International Journal of Management Reviews|volume=7|issue=2|year=2005|doi=10.1111/j.1468-2370.2005.00107.x|pages=73–90}}</ref>{{rp|74}}

Complexity theory has been used in the fields of [[strategic management]] and [[organizational studies]]. Application areas include understanding how [[organizations]] or firms adapt to their environments and how they cope with conditions of uncertainty. Organizations have complex structures in that they are [[Dynamic network analysis|dynamic networks]] of interactions, and their relationships are not aggregations of the individual static entities. They are adaptive; in that, the individual and [[collective behavior]] mutate and [[Self-organizing|self-organize]] corresponding to a change-initiating micro-event or collection of events.<ref name="CAS-T-01" /><ref name="CAS-T-02" />

== Key concepts ==

=== Complex adaptive systems ===
Organizations can be treated as [[complex adaptive systems]] (CAS) as they exhibit fundamental CAS principles like self-organization, [[complexity]], [[emergence]],<ref name="CAS-T-13" /> interdependence, space of possibilities, co-evolution,<ref name=CAS-T-37/><ref name="terra">{{cite journal|last1=Terra|first1=Leonardo Augusto Amaral|last2=Passador|first2=João Luiz|title=Symbiotic Dynamic: The Strategic Problem from the Perspective of Complexity|journal=Systems Research and Behavioral Science|date=2016|volume=33|issue=2|page=235|doi=10.1002/sres.2379}}</ref><ref name="TerraPassador2019">{{cite journal|last1=Terra|first1=L. A. A.|last2=Passador|first2=J. L.|title=The nature of social organization of production: From firms to complex dynamics|year=2019|journal=Systems Research and Behavioral Science|volume=36|issue=4|pages=514–531|doi=10.1002/sres.2567 |s2cid=149946425 }}</ref> [[Chaos theory|chaos]],<ref name=CAS-T-30/><ref name=CAS-T-34/><ref name="terra" /><ref name="TerraPassador2019" /> and [[self-similarity]].<ref name="CAS-T-01" /><ref name="CAS-T-03" /><ref name="terra" /><ref name="TerraPassador2019" />

CAS are contrasted with ordered and [[chaotic systems]] by the relationship that exists between the system and the agents which act within it.<ref name=CAS-T-30/> In an ordered system the level of constraint means that all agent behavior is limited to the rules of the system. In a chaotic system, the agents are unconstrained and susceptible to statistical and other analyses. In a CAS, the system and the agents co-evolve; the system lightly constrains agent behavior, but the agents modify the system by their interaction with it. This [[self-organizing]] nature is an important characteristic of CAS; and its ability to learn to adapt, differentiate it from other self-organizing systems.<ref name=CAS-T-01/><ref name=CAS-T-30/><ref name=CAS-T-34/><ref name="terra" /><ref name="TerraPassador2019" />

Organizational environments can be viewed as complex adaptive systems where [[coevolution]] generally occurs near the [[edge of chaos]], and it should maintain a balance between flexibility and stability to avoid organizational failure.<ref name=CAS-T-35/><ref name=CAS-T-30/><ref name=CAS-T-29/><ref name=CAS-T-37/><ref name="terra" /><ref name="TerraPassador2019" /> As a response to coping with turbulent environments; businesses bring out [[flexibility]], [[creativity]],<ref name=CAS-T-36/> [[agility]], and [[innovation]] near the edge of chaos; provided the organizational structure has sufficient [[decentralized]], [[Flat organization|non-hierarchical network]] structures.<ref name=CAS-T-35/><ref name=CAS-T-30/><ref name=CAS-T-29/><ref name="terra" />
  
== Implications for organizational management ==
CAS approaches to strategy seek to understand the nature of system constraints and agent interaction and generally takes an evolutionary or naturalistic approach to strategy.  Some research integrates [[computer simulation and organizational studies]].

===Complexity theory and knowledge management===
Complexity theory also relates to [[knowledge management]] (KM) and [[organizational learning]] (OL). "Complex systems are, by any other definition, learning organizations."<ref name="CAS-T-28" /> Complexity Theory, KM, and OL are all complementary and co-dependent.<ref name="CAS-T-28" /> “KM and OL each lack a theory of how cognition happens in human social systems – complexity theory offers this missing piece”.<ref name="CAS-T-28" />

=== Complexity theory and project management ===
Complexity theory is also being used to better understand new ways of doing [[project management]], as traditional models have been found lacking to current challenges.<ref name="Saynisch 2010">{{cite journal|author=Saynisch, Manfred|title=Beyond frontiers of traditional project management: An approach to evolutionary, self-organizational principles and the complexity theory—results of the research program|journal=Project Management Journal|volume=41|issue=2|year=2010|pages=21–37|doi=10.1002/pmj.20159|s2cid=47040850}}</ref>{{rp|23}} This approaches advocates forming a "culture of trust" that "welcomes outsiders, embraces new ideas, and promotes cooperation."<ref name="Saynisch 2010"/>{{rp|35}}

=== Recommendations for managers ===
Complexity Theory implies approaches that focus on flatter, more flexible organizations, rather than top-down, command-and-control styles of management.<ref name="Burnes, Bernard 2005"/>{{rp|84}}<ref name=CAS-T-29/><ref name=CAS-T-35/>

==Practical examples ==
A typical example for an organization behaving as CAS is [[Wikipedia]],<ref name="CAS-T-11" /> which is collaborated and managed by a loosely organized management structure<ref name="CAS-T-11" /> that is composed of a complex mix of [[human–computer interaction]]s.<ref name="CAS-T-16" /><ref name="CAS-T-17" /><ref name="CAS-T-18" /> By managing behavior, and not only content, Wikipedia uses simple rules to produce a complex, evolving knowledge base that has largely replaced older sources in popular use.{{fact|date=September 2023}}

Other examples include:
*the complex [[Macroeconomics|global macroeconomic network]] within a country or group of countries<!--much more complex than mere macroeconomic, any help in redirecting to a better page would be welcomed--->;
*[[stock market]] and complex web of [[Cross-border_cooperation|cross-border]] [[holding companies]];
*[[manufacturing|manufacturing business]]es<!--much more complex than mere manufacturing, any help in rewording would be welcomed--->;
*and any human social group-based endeavor in a particular [[ideology]] and [[social system]] such as [[political party|political parties]], [[community|communities]], [[geopolitical]] organizations, and [[terrorist network analysis|terrorist networks]] of both hierarchical and [[leaderless resistance|leaderless]] nature.<ref name="GT-33" />

This new macro level state may create difficulty for an observer in explaining and describing the collective behavior in terms of its constituent parts, as a result of the complex dynamic networks of interactions, outlined earlier.<ref name="CAS-T-01" />

== See also ==
* [[Complexity theory (disambiguation)]]
* [[Cynefin]] Centre for Organisational Complexity
* The [[Santa Fe Institute]]
* [[Global brain]]
* [[Self-organization]]
* The [[New England Complex Systems Institute]]
* [[Ralph Douglas Stacey]]
* [[Complex Adaptive Leadership]]

== References ==
{{reflist|30em|refs=
<ref name=CAS-T-01>{{cite web |url=http://tejas.iimb.ac.in/articles/12.php|title=Insights from Complexity Theory: Understanding Organisations better |publisher= by Assoc. Prof. Amit Gupta, Student contributor - S. Anish, IIM Bangalore|access-date=1 June 2012 }}</ref>

<ref name=CAS-T-02>{{cite web|url=http://psych.lse.ac.uk/complexity/Papers/Ch2final.pdf|archive-url=https://web.archive.org/web/20091229060410/http://www.psych.lse.ac.uk/complexity/Papers/Ch2final.pdf|url-status=dead|archive-date=29 December 2009|title=Ten Principles of Complexity & Enabling Infrastructures|publisher=by Professor Eve Mitleton-Kelly, Director Complexity Research Programme, London School of Economics|access-date=1 June 2012}}</ref>

<ref name=CAS-T-03>{{cite web |url=http://psych.lse.ac.uk/complexity/Papers/Ch2final.pdf |title=Page 3, Similar fundamental between CAS and organisations, from paper "Ten Principles of Complexity & Enabling Infrastructures" |publisher=by Professor Eve Mitleton-Kelly, Director Complexity Research Programme, London School of Economics |access-date=1 June 2012 |archive-url=https://web.archive.org/web/20130512173052/http://www.psych.lse.ac.uk/complexity/Papers/Ch2final.pdf |archive-date=12 May 2013 |url-status=dead }}</ref>

<ref name=CAS-T-11>{{cite journal|title=A Complex Adaptive Organization Under the Lens of the LIFE Model:The Case of Wikipedia|website=Egosnet.org|url=https://otago.academia.edu/JeanBaptisteFaucher/Papers/489796/A_Complex_Adaptive_Organization_Under_the_Lens_of_the_LIFE_Model_The_Case_of_Wikipedia|access-date=25 August 2012|last1=Faucher|first1=Jean-Baptiste}}</ref>

<ref name=CAS-T-13>{{cite web|title=Complex Adaptive Systems as a Model for Evaluating Organisational Change Caused by the Introduction of Health Information Systems|url=http://www.uow.edu.au/~kd21/uploads/Diment-complexity.pdf|work=Kieren Diment, Ping Yu, Karin Garrety, Health Informatics Research Lab, Faculty of Informatics, University of Wollongong, School of Management, University of Wollongong, NSW|publisher=uow.edu.au|access-date=25 August 2012|archive-url=https://web.archive.org/web/20120905170544/http://www.uow.edu.au/~kd21/uploads/Diment-complexity.pdf|archive-date=5 September 2012|url-status=dead}}</ref>

<ref name=GT-33>{{cite web|title=Toward a Complex Adaptive Intelligence Community The Wiki and the Blog|url=https://www.cia.gov/library/center-for-the-study-of-intelligence/csi-publications/csi-studies/studies/vol49no3/html_files/Wik_and_%20Blog_7.htm|archive-url=https://web.archive.org/web/20070613110629/https://www.cia.gov/library/center-for-the-study-of-intelligence/csi-publications/csi-studies/studies/vol49no3/html_files/Wik_and_%20Blog_7.htm|url-status=dead|archive-date=13 June 2007|work=D. Calvin Andrus|publisher=cia.gov|access-date=25 August 2012}}</ref>

<ref name=CAS-T-16>{{cite web|title=The Internet Analyzed as a Complex Adaptive System|url=http://spacecollective.org/aloksubbarao/5730/The-Internet-Analyzed-as-a-Complex-Adaptive-System|access-date=25 August 2012|archive-date=29 May 2019|archive-url=https://web.archive.org/web/20190529172224/http://spacecollective.org/aloksubbarao/5730/The-Internet-Analyzed-as-a-Complex-Adaptive-System|url-status=dead}}</ref>

<ref name=CAS-T-17>{{cite web|title=Cyberspace: The Ultimate Complex Adaptive System|url=http://www.dodccrp.org/files/IC2J_v4n2_03_Phister.pdf|publisher=The International C2 Journal
|access-date=25 August 2012}} by Paul W. Phister Jr</ref>

<ref name=CAS-T-18>{{cite web|title=Complex Adaptive Systems|url=http://web.mit.edu/esd.83/www/notebook/Complex%20Adaptive%20Systems.pdf|publisher=mit.edu|year=2001|access-date=25 August 2012}} by Serena Chan, Research Seminar in Engineering Systems</ref>

<ref name=CAS-T-28>{{cite journal|author=McElroy, Mark W.|title=Integrating complexity theory, knowledge management and organizational learning|journal=Journal of Knowledge Management|year=2000|volume=4|issue=3|pages=195–203|access-date=20 March 2016|doi=10.1108/13673270010377652|url=https://www.researchgate.net/publication/237279219}}</ref>

<ref name=CAS-T-29>{{cite web |url=http://www.faculty.umb.edu/david_levy/complex00.pdf|title=Applications and Limitations of Complexity Theory in Organization Theory and Strategy |publisher=umb.edu|last=L. Levy|first=David |access-date=23 August 2020}}</ref>

<ref name=CAS-T-30>{{cite web |url=http://www.strategy-business.com/article/15099?gko=d48d4|title=Between Chaos and Order: What Complexity Theory Can Teach Business|publisher=strategy-business.com|last=Berreby|first=David|date=1 April 1996|access-date=23 August 2020}}</ref>

<ref name=CAS-T-31>{{cite book|last = Mak |first = Wai Ming |title = Section 7, Rethinking Business Strategy with Complexity Theory, from book - Systems Theory and Practice in the Knowledge Age, edited by Gillian Ragsdell, Daune West, Jennifer Wilby |url = https://books.google.com/books?id=pPcGCAAAQBAJ  |publisher = Springer Science & Business Media, 2012 |year =2012|isbn =9781461506010 |page =[https://link.springer.com/chapter/10.1007/978-1-4615-0601-0_37 321] |doi = 10.1007/978-1-4615-0601-0_37 |access-date=23 August 2020}}</ref> 

<ref name=CAS-T-32>{{cite book |last1 = M. Eisenhardt |first1 = Kathleen|last2 = McKelvey|first2 =Bill|title = Section 29, Complexity Theory and Corporate Strategy, from book - The SAGE Handbook of Complexity and Management edited by Peter Allen, Steve Maguire, Bill McKelvey|url = https://books.google.com/books?id=BfO1OTuZmPkC  |publisher = SAGE, 2011 |year =2011 |isbn =9781446209745 |page =[https://pdfs.semanticscholar.org/e7eb/ce4b9b802d0cd9437a114ad047a7aa622a19.pdf 506] |access-date=23 August 2020}}</ref> 

<ref name=CAS-T-33>{{cite book |last1=Forgues|first1=Bérnard|last2=Thietart |first2 =Alain|title = Section 2, Complexity science and organization, from book - The SAGE Handbook of Complexity and Management edited by Peter Allen, Steve Maguire, Bill McKelvey|url = https://books.google.com/books?id=BfO1OTuZmPkC&pg=PA53  |publisher = SAGE, 2011 |year =2011 |isbn =9781446209745 |page =[https://books.google.com/books?id=BfO1OTuZmPkC&pg=PA53 53] |access-date=23 August 2020}}</ref> 

<ref name=CAS-T-34>{{cite journal |url=https://hbr.org/2013/11/managing-complexity-is-the-epic-battle-between-emergence-and-entropy|title=Managing Complexity Is the Epic Battle Between Emergence and Entropy|journal=Harvard Business Review|last=Birkinshaw|first=Julian|date=11 November 2013|access-date=23 August 2020}}</ref>

<ref name=CAS-T-35>{{cite web |url=https://forestbioproducts.umaine.edu/wp-content/uploads/sites/202/2010/10/Porter.Coev-Proofs.pdf|title=Coevolution as a research framework for organizations and the natural environment|publisher=University of Maine|last=B. Porter|first=Terry|access-date=23 August 2020}}</ref>

<ref name=CAS-T-36>{{cite web |url=https://www.researchgate.net/publication/328890717|title=The Order-Chaos Dynamic of Creativity|publisher=University of New Brunswick|last=A Lambert|first=Philip|date=June 2018|access-date=24 August 2020}}</ref>
 
<ref name=CAS-T-37>{{cite web |url=https://grantome.com/grant/NSF/DBI-9201536|title=Coevolution in Complex Adaptive Systems|publisher=Santa Fe Institute|last=Kauffman|first=Stuart |date=15 January 1992|access-date=24 August 2020}}</ref>


<!-- Unused references below this line.
<ref name=AFC-NA-21> [[Steven Strogatz]], [[Duncan J. Watts]] and [[Albert-Laszlo Barabasi]] {{cite web |title =  explaining synchronicity, network theory, self-adaptation mechanism of complex systems, Six Degrees of separation, Small world phenomenon, events are never isolated as they depend upon each other ''(at 27:07)'' in the BBC / Discovery Documentary |work = BBC / Discovery  |url=http://topdocumentaryfilms.com/six-degrees-of-separation/|access-date=11 June 2012}} "Unfolding the science behind the idea of six degrees of separation" </ref>

<ref name=CAS-T-06>{{cite web |url=http://psych.lse.ac.uk/complexity/Papers/Ch2final.pdf|title= Page 20 - Ten Principles of Complexity & Enabling Infrastructures |publisher= by Professor Eve Mitleton-Kelly, Director Complexity Research Programme, London School of Economics |access-date=1 June 2012 }}</ref>

<ref name=CAS-T-07>{{cite web |url=http://socrates.berkeley.edu/~keltner/publications/keltner.advances.2008.pdf|title= A Reciprocal Influence Model of Social Power: Emerging Principles and Lines of Inquiry
|publisher= by Dacher Keltner,* Gerben A. Van Kleef, Serena Chen, and Michael W. Kraus, berkeley.edu |access-date=16 July 2012 }}</ref>

<ref name=CAS-T-08>{{cite web |url=http://www.nationalforum.com/Electronic%20Journal%20Volumes/Lunenburg,%20Fred%20C.%20Reciprocal%20Theory%20IJSAID%20V12%20N1%202010.pdf|title= Reciprocal Influence Theory: A Reality in Most Organizations|publisher= by Fred C. Lunenburg, Sam Houston State University |access-date=16 July 2012 }}</ref>

-->
}}

== Further reading ==
* Axelrod, R. A., & Cohen, M. D., 2000. ''Harnessing Complexity: Organizational Implications of a Scientific Frontier.'' New York: The Free Press
* [[Yaneer Bar-Yam]] (2005). ''Making Things Work: Solving Complex Problems in a Complex World.'' Cambridge, MA: Knowledge Press
* Beautement, P. & Broenner, C. 2010. [http://www.beautement.com/Books/Complexity_Demystified/complexity_demystified.html Complexity Demystified: A Guide for Practitioners]. Originally published in Axminster: Triarchy Press
*Biermann, F. & Kim, R.E. (Eds). 2020. [[doi:10.1017/9781108784641|''Architectures of Earth System Governance: Institutional Complexity and Structural Transformation'']]. Cambridge University Press.
* Brown, S. L., & Eisenhardt, K. M. 1997. The Art of Continuous Change: Linking Complexity Theory and Time-paced Evolution in Relentlessly Shifting Organizations. ''Administrative Science Quarterly'', 42: 1–34
* Burns, S., & Stalker, G. M. 1961. The Management of Innovation. London: Tavistock Publications
* Davis, J. P., Eisenhardt, K. M., & Bingham, C. B. 2009. Optimal Structure, Market Dynamism, and the Strategy of Simple Rules. ''Administrative Science Quarterly'', 54: 413–452
* De Toni, A.F., Comello, L., 2010. Journey into Complexity. Udine: Lulu Publisher
* Fonseca, J. (2001). Complexity and Innovation in Organizations. London: Routledge
* Douma, S. & H. Schreuder, Economic Approaches to Organizations, 6th edition, Harlow: Pearson.
* {{cite book|author=Gell-Mann, M.|authorlink=Murray Gell-Mann|year=1994|title=The Quark and the Jaguar: Adventures in the Simple and the Complex|location=New York|publisher=WH Freeman}}
* Kauffman, S. 1993. ''The Origins of Order''. New York, NY: Oxford University Press.
* Levinthal, D. 1997. Adaptation on Rugged Landscapes. ''Management Science'', 43: 934–950
* Liang, T.Y. 2016. Complexity-Intelligence Strategy: A New Paradigmatic Shift. Singapore: World Scientific Publishing.
* March, J. G. 1991. [https://sjbae.pbworks.com/f/march+1991.pdf Exploration and Exploitation in Organizational Learning]. ''Organization Science'', 2(1): 71–87
* McKelvey, B. 1999. Avoiding Complexity Catastrophe in Coevolutionary Pockets: Strategies for Rugged Landscapes. ''Organization Science'', 10(3): 249–321
* McMillan, E. 2004 Complexity, Organizations and Change. Routledge.{{ISBN|041531447X}} Hardback. {{ISBN|0-415-39502-X}} Paperback
* Moffat, James. 2003. Complexity Theory and Network Centric Warfare.
* Obolensky N. 2010 Complex Adaptive Leadership - Embracing Paradox and Uncertainty
* Perrow, C. Complex Organizations: A Critical Essay Scott, Forseman & Co., Glenville, Illinois
* Rivkin, J., W. 2000. Imitation of Complex Strategies. ''Management Science'', 46(6): 824–844
* Rivkin, J. and Siggelkow, N. 2003. Balancing Search and Stability: Interdependencies Among Elements of Organizational Design. ''Management Science'', 49, pp.&nbsp;290–311
* Rudolph, J., & Repenning, N. 2002. Disaster Dynamics: Understanding the Role of Quantity in Organizational Collapse. ''Administrative Science Quarterly'', 47: 1–30
* Schilling, M. A. 2000. Toward a General Modular Systems Theory and its Applicability to Interfirm Product Modularity. ''Academy of Management Review'', 25(2): 312–334
* Siggelkow, S. 2002. Evolution toward Fit. ''Administrative Science Quarterly'', 47, pp.&nbsp;125–159
* Simon, H. 1996 (1969; 1981) The Sciences of the Artificial (3rd Edition) MIT Press
* Smith, Edward. 2006. Complexity, Networking, and Effects Based Approaches to Operations] by Edward
* Snowden, D.J. Boone, M. 2007. "A Leader's Framework for Decision Making". Harvard Business Review, November 2007, pp.&nbsp;69–76.
* Weick, K. E. 1976. Educational Organizations as loosely coupled systems. ''Administrative Science Quarterly'', 21(1): 1–19

{{Aspects of organizations}}

{{DEFAULTSORT:Complexity Theory And Organizations}}
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