No abstract

This paper uses a complex adaptive systems view to examine two different organizational responses to turbulent, complex environments. We examined the internal make‐up of eight organizations that saw their environment the same way – as rapidly changing, complex and requiring aggressive change strategies. Half of these organizations chose a complexity absorption response to environmental turbulence, and half chose a complexity reduction response to environmental turbulence and complexity. The organizations pursuing a complexity absorption response outperformed those organizations with complexity reduction responses.

This paper adopts a view of organizations as complex adaptive systems and makes a case for making organizations more complex internally through the use of a fairly simple managerial rule -using participative decision making. Participation in decision making enhances connectivity in organizations, which in turn, gives the organization the opportunity to self-organize and co-evolve in more effective ways than when there is minimal connectivity (i.e., autocracy). The paper uses a specific body of research to support the arguments about why participation can benefit the practice of management in modern organizations. We used to think that we knew how to run organizations. Now we know better. More than ever they need to be global and local at the same time, to be small in some ways but big in others, to be centralized some of the time and decentralized most of it. They expect their workers to be both more autonomous and more of a team, their managers to be more delegating and more controlling. (Handy, 1994) These comments reflect profound changes that are occurring in work organizations; changes that require new modes of organizing and managing. Early conceptualizations of management, developed largely by engineers, relied on a Newtonian view of the world and led to a machine model of organizations.

Each time managers are faced with a strategic decision they decide how to decide. Specifically, they make choices about who has necessary information and, therefore, who needs to participate in the decision. Such responses to strategic issues are believed to be affected by the way in which decision makers interpret issues. However, organizations develop habitual responses to issues and may be predisposed because of their attention to rules and routines, or because of past performance, to respond to strategic issues in certain ways regardless of how issues are interpreted. We examined the direct and indirect effects of predisposition (rule orientation and past financial performance) and interpretation of strategic issues on the participation of internal stakeholder groups in strategic decision making. Executives in 52 organizations indicated that rule orientation and performance are directly linked to participation in strategic decision making, and that interpretation and rule orientation are directly linked to each other. Implications for managers include the notion that any effort to improve decision-making effectiveness by shaping how organizational members frame and interpret issues will be constrained by the organization's existing routines as well as its past performance.