organizational strategy as a social choice

I’m pretty enamored by many things (including performativity).  One of them is social choice theory.  I think the intuition developed by scholars like Condorcet, Arrow and Sen is fundamental for any social, political or economic setting.  Now, the theory of course does not capture many issues: social influence, the origins of preferences, and more generally, contextual issues.  Some might even say that social choice theory scarcely corresponds with reality.   But I think it nonetheless is a very powerful theory.

What I like about social choice theory is that it fundamentally is about social aggregation.  And one beef I’ve had for some time is the lack of consideration for aggregation-related issues in organization theory (and strategy for that matter).  Now, sure, aggregation isn’t everything – of course contextual/organizational factors and the environment matter.  But there used to be a brand of organization theory that also dealt with questions of aggregation – a portion of the Simon-March line of work was dedicated to this issue.  A nice articulation of a few of the key issues can be found in Jim March’s (1962) classic (and definitely under-cited) Journal of Politics piece “the business firm as a political coalition.”

So, with colleagues I’ve been working on some papers that try to apply and amend social choice intuition in the context of organizations.  In one paper we develop a formal model of organizational strategy as a social choice.  In the model we specifically allow for particular influence structures to condition and shape social choices in organizations. So, ok, this post is a bleg – my colleague (in electrical engineering) and I would like feedback on this particular paper.

If any of the above sounds even vaguely interesting, you can download the short pdf here (or, I also just posted the paper onto SSRN if that is more convenient).  Any feedback would be appreciated.

Written by teppo

October 5, 2011 at 7:54 pm

3 Responses

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  1. I highly endorse the effort to think through issues of aggregation in organizations more explicitly. This was perhaps the greatest contribution of March & Simon to the study of organizations: as political scientists, they naturally contemplated the problem of hierarchy as a problem of non-obvious aggregation, that is, “How can smart organizations be comprised of dumb [boundedly rational] people?” As Jon Bendor put it, a chain is only as strong as its weakest link; yet strong organizations are made up of nothing but weak links. But I think your paper focuses on aggregating *preferences* (which makes organizations like markets and elections), whereas I understood March & Simon and followers to focus on aggregating *knowledge and decisions*. Is this just early-onset dementia on my part?



    October 6, 2011 at 2:46 am

  2. Jerry: you are right – in this paper we are using a preference-type framework though sorta modified given that these are preferences (more like beliefs, see below) that also a) have a social dimension AND b) the context that we are dealing with isn’t preferential in the sense of which restaurant we should go to (or whom to elect, or whatever) but rather a collective decision situation in an uncertain environment. So, in some ways the preferences are beliefs about possible states of the world. Levitt and March (in their 1988 ARS piece), if I remember correctly, actually have a brief discussion of the preferences versus beliefs language. That March JoP piece (cited above) also touches on this issue a bit vis-a-vis social preferences in organizations.

    The central issue from my perspective is to resolve the heterogeneity and (potential) conflict – as organizations are composed of individuals “whose preferences, information, interests or knowledge differ” (March and Simon, 2).



    October 6, 2011 at 3:04 am

  3. I worked through the math, but I was unclear what the payoff is. Have you taught us something about when it is possible for organizations to act as unitary actors with complete, transitive preferences? Or was that not the goal?



    December 21, 2011 at 2:59 pm

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