Complexity in Organization

January 22, 1998 - 12:00pm
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Models of economic organizations have the potential to account for the serious empirical discrepancies between the real-world behavior of firms and the predictions of conventional maximization models. An example is the "energy efficiency paradox." Even in very simple models, a large number of organizational characteristics can be shown to influence economic performance. In addition to their theoretical interest, such results have interesting policy implications because they raise the possibility that externally-driven objectives, such as for energy efficiency or emissions control, may shift the firm to a new structural compromise that improves other firm objectives as well, rather than necessarily imposing economic losses.

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