Organizational Restructuring in Response to Changes in Information - Processing Technology

Abstract

This paper examines the effects of changes in information - processing technology on the efficient organizational forms of data - processing in decision - making systems. Data-processing is modelled in the framework of the dynamic parallel processing model of associative computation with an endogenous set - up costs of the processors. In such a model, the conditions for efficient organization of information - processing are defined and the architecture of the efficient structures is considered. It is shown that decreasing returns to scale of the function describing data - processing technology and the information overload of the system are necessary and sufficient conditions for the hierarchical information - processing, respectively. Moreover, the size of the efficient structures is determined exclusively by their information workload and the current state of information-processing technology.

Keywords: Technological changes, organizational restructuring, hierarchy, decision - making, information - processing

JEL Classification: D79