Organizational Design and Restructuring in Response to Crises: Lessons from Computational Modeling and Real-World Cases

Published Online:https://doi.org/10.1287/orsc.1060.0210

Organizations are occasionally faced with technology-based and accident-triggered crises that may cause costly disasters if not handled properly. Questions arise: How should organizations, with their complex processes and human involvement, be designed if they are to perform well in such crises? Would organizations benefit from structural changes during crises? From a neo-information processing perspective that views organizations as composed of cognitively restricted, socially situated, and task-oriented actors, we argue that the causes and consequences of crises may be better understood through the systematic examination of both environmental and organizational factors. We address our research questions using a rather unique approach: a matched analysis of 80 real organizational cases and 80 computer-simulated organizations. The findings show that a crisis can present critical challenges to organizational performance both externally and internally, and that there is no design guarantee that a high-performing organization will continue to perform well during a crisis situation. In addition, when organizations restructure to adapt to crisis situations, they often face the serious challenges of having to understand not only the external environment, but also organizational design traps.

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