A new view of organizations as disequilibrium systems

In this paper we develop a new view of organizations as disequilibrium systems. To introduce our ideas and some terminology we use a simple economic model of a firm. We demonstrate that the decisions made by the management might cause a regular or chaotic evolution of the firm, and that the latter gives inferior results in terms of certain performance measures. We also show that the management can stabilize and control chaotic dynamics by implementing suitable organizational rules. Using these concepts we then go on to present a description of organizations as disequilibrium systems which differs from the one presented in the literature. The firm’s evolution occurs on a chaotic attractor, which is neither the final nor the desired state from the management’s point of view. Instead the decision makers of the firm try to steer the firm into a predetermined unstable state embedded in this chaotic atttractor by employing suitable organizational rules. If their implementation is successful the undesired fluctuations are effectively removed and performance is improved. As this chosen target state is shifted when structural parameters of the firm’s environment change, repeated adaptations of the implemented organizational rules are indicated.