Organizational Architecture and the Degree of Flexibility in Production Costs
Gonzalo Castañeda* and Rubén Chavarín+
*El Colegio de México, +Universidad de Guadalajara.
Abstract
An agent-based model is built with the aim of explaining the effect of organizational architecture on the performance (network size and stability) of a business group. An artificial network is grown in which each node (firm) is subject to random income shocks while the degree of flexibility of the productive system (labor marker rigidity and technology’s capita-labor ratio) is assumed exogenously. Two variants of organizational architecture are considered: (i) decentralized management, where each node makes local decisions and behaves opportunistically with a positive probability when a troubled partner needs to be rescued and (ii) centralized management, where financial transfers from other firms are made with certainty as long as there are funds available, although, the functioning of this network entails some monitoring cost. This theoretical background is used to explore the Mexican experience of the nineteenth and twentieth centuries.
JEL Code: D23, D85, C15, N86
Key Words: organizational architecture; management systems; networks; agent-based model; Mexican firms
jueves, 13 de noviembre de 2008
Documento de Trabajo CIIE, No. 2008-08
The Rise and Fall of Socially Embedded Entrepreneurial Spin offs
Gonzalo Castañeda
Abstract
This paper develops an overlapping generations model to analyze the construction and ulterior collapse of ethnic business networks. The micro-foundation of the network expansion is based on bounded rationality, heterogeneous agents and their embeddedness in a particular form of social governance. The solution of the model, by graphical means and numerical simulations, offers valuable insights on how a downfall in this type of network is endogenously generated. The mathematical model and the simulations are motivated with some qualitative observations of the Barcelonnettes’ business empire, a group of French immigrants who setup an immigration chain in Mexico in the XIX century.
JEL Code: L14, N86, C15
Key works: business networks; immigration chains; social embeddedness; non-linear dynamics
Gonzalo Castañeda
Abstract
This paper develops an overlapping generations model to analyze the construction and ulterior collapse of ethnic business networks. The micro-foundation of the network expansion is based on bounded rationality, heterogeneous agents and their embeddedness in a particular form of social governance. The solution of the model, by graphical means and numerical simulations, offers valuable insights on how a downfall in this type of network is endogenously generated. The mathematical model and the simulations are motivated with some qualitative observations of the Barcelonnettes’ business empire, a group of French immigrants who setup an immigration chain in Mexico in the XIX century.
JEL Code: L14, N86, C15
Key works: business networks; immigration chains; social embeddedness; non-linear dynamics
Documento de Trabajo CIIE, No. 2008-07
Cultural Thresholds, Collective Action and Institutional Reform
Gonzalo Castañeda
Abstract
This paper presents a theory that analyzes the propagation of a cultural variant that induces the cohesiveness of civil society and, thus, the society’s capacity to solve collective action problems. The model combines tools of evolutionary game theory with a solution concept for strategic behavior where rationally bounded decisions are made sequential. With this framework, it is possible to explain the co-evolution of contemporary cultural values with economic/political variables, as well as the importance of the historical legacy in establishing the country’s development path. Likewise, it is argued that economic theorizing requires cultural arguments for a better understanding of institutional inertias, lock-ins, and poverty traps.
Gonzalo Castañeda
Abstract
This paper presents a theory that analyzes the propagation of a cultural variant that induces the cohesiveness of civil society and, thus, the society’s capacity to solve collective action problems. The model combines tools of evolutionary game theory with a solution concept for strategic behavior where rationally bounded decisions are made sequential. With this framework, it is possible to explain the co-evolution of contemporary cultural values with economic/political variables, as well as the importance of the historical legacy in establishing the country’s development path. Likewise, it is argued that economic theorizing requires cultural arguments for a better understanding of institutional inertias, lock-ins, and poverty traps.
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