Design Rules Volume 2: Chapter 4—The Mirroring Hypothesis: Linkages Within and Across Transaction Free Zones

Abstract

A technology is a specific way to achieve a material goal. It describes a feasible path—a recipe—by which a group of people can arrive at a goal that none could achieve individually. Technical recipes thus require linkages between and among the various contributors to the technical process.

The purpose of this chapter is to look at the relationship between the steps in a given technical recipe and organizational linkages between and among people implementing the recipe. I begin by introducing two concepts: (1) technical dependencies which are properties of the technical architecture; and (2) organizational ties which are properties of the organizational architecture. The idea that organizational ties ought to correspond to technical dependencies is known as the mirroring hypothesis. This chapter defines the mirroring hypothesis and describes its origins. It then investigates the theory behind the hypothesis and identifies a set of “predictable exceptions” where the hypothesis does not hold. Finally it considers the evidence for and against mirroring in the economy at large.

Keywords: Technology, Organizations, Modularity

JEL Classification: L1,L2,O3