The inevitability and irreversibility of organizational uncontrollability

Abstract

In this paper, a classic and seminal contribution of Williamson (J Polit Econ 75:123–138, 1967), “Hierarchical control and optimum firm size”, is revisited so as to remove two of its restrictive assumptions. The introduction of the dynamics of the quality of vertical communication into Williamson’s static model and the development of a simulation to analyze these dynamics provide the opportunity to demonstrate the plausibility of a new conjecture: in each and every hierarchically structured organization, irreversible organizational uncontrollability is ultimately bound to arise, even in a completely stable environment. This is our main contribution. Moreover, we demonstrate that this conjecture is also valid for non-hierarchically structured organizations.