Network Centralization and Collective Adaptability to a Shifting Environment
Bernstein, E. S., Shore, J. C., and Jang, A. J. (Forthcoming) Network centralization and collective adaptability to a shifting environment. Organization Science
67 Pages Posted: 9 Feb 2022
Date Written: February 4, 2022
We study the connection between communication network structure and an organization's collective adaptability to a shifting environment. Research has shown that network centralization—the degree to which communication flows disproportionately through one or more members of the organization rather than being more equally distributed—interferes with collective problem-solving by obstructing the integration of existing ideas, information, and solutions in the network. We hypothesize that the mechanisms responsible for that poor integration of ideas, information, and solutions would nevertheless prove beneficial for problems requiring adaptation to a shifting environment. We conducted a 1,620-subject randomized online laboratory experiment, testing the effect of seven network structures on problem-solving success. To simulate a shifting environment, we designed a murder mystery task and manipulated when each piece of information could be found: early information encouraged an inferior consensus, requiring a collective shift of solution after more information emerged. We find that when the communication network within an organization is more centralized, it achieves the benefits of connectivity (spread of novel, better solutions) without the costs (getting stuck on an existing, inferior solution). We also find, however, that these benefits of centralization only materialize in networks with two-way flow of information and not when information only flows from the center of the network outwards (as can occur in hierarchical structures or digitally mediated communication). We draw on these findings to reconceptualize theory on the impact of centralization—and how it affects conformity pressure (lock-in) and awareness of diverse ideas (learning)—on collective problem-solving that demands adaptation.
Keywords: Network Centralization; Adaptability; Shifting Environment; Complex Problem Solving; Organizational Structure
JEL Classification: M10
Suggested Citation: Suggested Citation