Robustness and Complexity: A New Perspective for Strategy.

This paper develops a novel approach to analyze the relation between complexity and robustness in social organizations. To this end, we develop a measure of complexity that can be used to quantify organizational complexity from empirical data. From a theoretical perspective, we outline how our complexity measure can be used to identify gains from improving the balance between an organization's differentiation (division of labor) and integration (of the divided effort). Our complexity measure also serves as a stepping-stone for analyzing robustness in complex organizations. We show that complexity not only represents a liability of change, but also enhances the organization’s ability to withstand turbulence in its value network. Surprisingly, perhaps, we can demonstrate that complexity controls robustness: the higher the complexity of a system, the greater its potential robustness. We argue that this insight reconciles literatures on resilience and complexity and opens a new perspective on the drivers of performance in business ecosystems and other complex organizations.