Models of Complex Adaptive Systems in Strategy and Organization Research

Abstract

The development of new theory is often spurred by novel techniques that provide better answers to existing questions, or that allow asking new ones. In the field of strategy and organization science, models of complex adaptive systems have renewed theoretical work on a fundamental question: how organizations can adapt effectively to their environments. This article has three objectives: (1) to highlight some areas where models of organizations as complex adaptive systems have made substantial contributions: the search for solutions to sets of interdependent choices, the challenge of balancing processes of exploration and exploitation, and the organization of imperfect decision makers; (2) to point to several challenges and tradeoffs, which can limit the explanatory power and eventual impact of the modeling enterprise; and (3) to sketch out possible future directions of research that would do further justice to the notion of organizations as complex adaptive systems.

Keywords: complex systems, adaptation, strategic management, organization design, formal models, agent-based models

JEL Classification: C15, C63, D83, L2, D7, M10, M20, O31