Hierarchies and Transactive Memory Systems: Crafting a Model of Flexible Exception Handling

Information processing theory describes organizations as information processing systems whose performance is contingent upon the relative fit between the information process capacity of the organization and the information processing demands created by the task environment (Galbraith, 1974). A key element of this theoretical framework is the relationship between organizational structure and the information processing capacity of the organization. In routine, stable task environments characterized by relatively low task uncertainty, the hierarchy is employed to handle exceptions (or situations for which no organizational rules exist). In such cases, the information processing capacity of the hierarchy is sufficient for handling the moderate information processing demands associated with the relatively few exceptions that do arise. However in more complex, dynamic task environments characterized by higher task uncertainty, the number and type of exceptions that occur can quickly overload the information processing capacity of the hierarchy, resulting in degradation of project and project team performance.