Sysfems Rrreorch Vol 7, NO 3. pp. 207-208. 1990.

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Correspondence
Speculation on the Relationship Between
Organizational Structure, Entropy, and
Organizational Function
DANIEL HERSHEY,* JONATHAN BREINER, TROY DARCY,
MICHAEL McFARLAND and MICHAEL OATES
Department of Chemical Engineering, M.L. 171, University of Cincinnati,
Cincinnati OH 45221-0171, U.S.A.

(Received 6 February 1990 ; in rerised form 22 Morch 1990)

Key wordsEntropy ;structure, order; disorder ; information.

Abstract-Measures of entropy and efficiency were calculated course there are numerous other 9-unit con-
for four simple organizational structures. Based on these results,
it was speculated that organizational configuration can play a figurations possible.
role in organizational function since information flow and the
concomitant order and disorder are affected. Model 1. Horizontal, ideal
This ideal model supposes that all units com-
municate perfectly with each other, and with the
RECENTLY, Hershey and co-workers presented the leader (unit I ) who can process all information
entropy equations [I], and an analysis [2] of an received.
evolving corporate structure as an open system.
Graphs of entropy and efficiency (measures of Model 2. Vertical
structural order) reflected a creeping malaise within Model 3. Intermediate
the hypothetical organization. These graphs were
also able to signal the onset of a reinvigoration Model 4. Chaos
period. Efficiency is related to the entropic distance This model is our definition of organizational
of the organizational structure from chaos. chaos, o r disaster, where all units have equal budg-
The analysis suggested the possibility of a theor- ets (5,000), and are completely independent (no
etical connection between corporate function and leader).
structure. Now we report on the calculation of
entropy and efficiency for various organizational Summury of the Culculutions
~ ..
structures, to illustrate a changing pattern in values
for entropy and efficiency. Whether function rig- Entropy EHiciency
orously follows form is yet to be established. Model and Name S (!!o
-__ ~. ~~
- - __

Four Model Strurfures

1 . Horizontal, ideal 2.40 I 100.00
Each model structure will contain 9 units; the 2. Vertical 2.957 27.70
3. Intermediate 2.641 68.79
total organizational budget is 45,000. In all ex-
amples presented here, unit 1 has an arbitrary budget
4. Chaos 3.170 0 .oo
.. - .. _ - -
of 1,000; unit 2 = 2,000; . . .; unit 9 = 9,000. Cal-
~~

culation of entropy, S, and efficiency. q, are given

according to formulas previously published ( I ) . Of
4

* Author to whom correspondence is to be addressed. Fig. I . Horizontal. ideal.

207
208 Correspondence

A rial-vsis
We see that entropy, S, for Model 1 at least
(least disorder), while Model 4 achieves the greatest
entropy value (most disorder). Vertical Model 2,
requiring information flow through many layers,
approaches the worst case, while Intermediate
Model 3 is somewhere between the extremes. For
the Chaos Model 4, entropy is maximum and
efficiency is zero (minimum information flow and
greatest disorder).
Based on the results reported here, it would seem
that organizational configuration could play a role
in organizational function. If this speculation is cor-
Fig. 2. Vertical.
rect, then it should be possible with our equations
to play 'what-if' games, whereby planners might
experiment with various structures in search of an
4 optimum. For future research, it may also be useful
to explore the effect of the center of gravity of the
organizational structure on its function.

Fig. 3. Intermediate. REFERENCES

1. D. Hershey, Excess entropy (EE) and excess entropy pro-
duction (EEP) in aging. evolving systems, Sysr. Res. 5 [ 1988).
0121131141H~01sllel 261-263.
2. D. Hershey, Entropy analysis of an aging, evolving corporate
Fig. 4. Chaos. system, Sysr. Res. 6 (1989). 75-79.