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Knowledge, Organization, and ManagementBuilding on the Work of Max Boisot$
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John Child and Martin Ihrig

Print publication date: 2013

Print ISBN-13: 9780199669165

Published to Oxford Scholarship Online: September 2013

DOI: 10.1093/acprof:oso/9780199669165.001.0001

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Extreme Outcomes, Connectivity, and Power Laws: Towards an Econophysics of Organization

Extreme Outcomes, Connectivity, and Power Laws: Towards an Econophysics of Organization

(p.61) 4 Extreme Outcomes, Connectivity, and Power Laws: Towards an Econophysics of Organization
Knowledge, Organization, and Management

Max Boisot

Bill McKelvey

Oxford University Press

Organization science to study extremes more rigorously. For a new perspective, we turn to an emerging new physics expressly aimed at dealing with complexity dynamics, Econophysics. It incorporates biological concepts of organization, ones in which organizational adaptation occurs in the context of a surrounding rank/frequency (R/F) distribution of millions of tiny start-up firms at one end vs. one giant firm at the other end of the two long tails of a Pareto distribution. This chapter distinguishes between the old simplicity of reductionism, equations, linearity and predictions of old physics, and the new simplicity of insignificant initiating ‘butterfly-events’—nonlinearity, similar causal dynamics at multiple levels, power laws, and scale-free theory. Cognitive representations of the real-world and follow-on creation of response schema are shifted from Gaussian to Paretian simplicity. Organizational schema formation and adaptation within the Gaussian and Paretian ontologies are framed in terms of adaptive responses subject to Ashby’s Law of Requisite Variety and our Ashby Space. An organization science based on researching rank-frequencies, scale-free dynamics, and fractal structures is outlined.

Keywords:   extreme outcomes, econophysics, rank/frequency, Pareto distribution, nonlinearity, butterfly-events, fractals, power laws, scale-free theory, Ashby’s law, Ashby space

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