An Analytical and Simulation Study on Information Processing and Organizational Structure

External environment has long been identified as the major source of uncertainty that an organization has to face in order to run effectively.Nowadays the environment that confronts most organizations is becoming more uncertain than ever before due to ever-increasing complexity,competitiveness and dynamics.In this paper,an organization is considered as a network of information processing,and a mathematical model is developed to examine how organizational structure and the external environment interact in determining organizational performance as measured by the value of organizational structure.Also,the influence of information cost on optimal organizational structure is examined.The analytical study and numerical simulation based on the formal model could generate new interpretations,understandings and managerial implications for the organizational structure design in an uncertain environment.