The Matrix of Complexity: A Multi-Disciplinary Approach for

Studying Emergence in Coevolution •

Benyamin Bergmann Lichtenstein

Department of Management and Marketing
University of Hartford
West Hartford, CT 06117-1599
860/768-4270
<Benyamin@mail.hartford.edu>

October, 2000
Version 9.3

To be published in:
Mobilizing the Self-Renewing Organization: The Coevolution Advantage
Edited by Arie Lewin and Henk Voldberda; SAGE Publications, forthcoming.

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This paper benefited from very useful comments by Phil Anderson, Janice Black, Kathleen Carley, Kevin
Dooley, Robert Drazin, Bob Farias, Bill McKelvey, and Olav Sorenson, among others. I’m also indebted
to participants of the 2000 Academy of Management symposium, “Bringing Complexity to Bear on
Organizations” (organized by Alan Meyer) for their perceptive feedback. Research leading to the
development of this paper was generously funded by the Center for Entrepreneurial Leadership Inc., and
the Ewing Marion Kauffman Foundation, as well as by the Irwin Foundation. The contents of this
publication are solely the responsibility of the author.

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NOTE TO COLLEAGUES!!

My goal is to extend this paper, generalize it to Organization Theory (rather than focus on
co-evolution), and submit it to Academy of Management Review. However, I NEED YOUR
HELP! What should a 'review' and theoretical contribution on Complexity Research look
like? What should it include, and how should the field be represented at this early stage in its
development? Please give me whatever suggestions you like - particularly around my choice
of disciplines in Table 1, and let me know if you would consider a form of co-authorship.
THANK YOU!!

INTRODUCTION
Many researchers have been suggesting that complexity research can play an

important role in organization science (Brown & Eisenhardt, 1997; Anderson, 1999a;
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McKelvey, 1999a). For example, in the past few years scholars have used a variety of

dynamic systems theories to provide a more complete understanding of organization design

(Levinthal and Warglien, 1999), network structuring (Carley, 1999) and strategic adaptation

(McKelvey, 1999b). In addition, the concepts of emergence and self-organization have been

used to explain various elements of strategic decision making (Bettis and Prahalad, 1995;

Stacey, 1995; MacIntosh and MacLean, 1999), entrepreneurship (Stevenson and Harmeling,

1990; Gartner, 1993), career theory (Bird, 1998), organizational learning (Nonaka, 1988;

1994), leadership (Senge, 1990b; McKelvey, 2000 ), and organizational change and

transformation (Leifer, 1989; Dooley, 1997).

More recently, scholars have recognized the potential role of complexity research in

explaining coevolutionary properties and processes (Baum, 1999; Lewin, Long and Carroll,

1999; Lewin and Volberda, 1999; McKelvey, 1999). Complexity models and methods may

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be particularly valuable for studying the multi-level properties, multi-directional causalities,

non-linearities, positive feedbacks, and path dependent processes that are at the heart of

coevolutionary research (Lewin and Voldberda, 1999). Additionally, complexity research

provides an excellent framework for understanding adaptive ordering in dynamic

environments, one of the central issues in coevolutionary research (Lewin and Voldberda,

1999; Lewin et al., 1999). These possibilities, like those identified in uni-disciplinary studies

mentioned above (e.g. organization design, strategy, entrepreneurship), have generated a

great deal of enthusiasm for the long-term prospects of applying complexity theory to

management (McKelvey, 1999a).

As one might expect (Abrahamson, 1996), this enthusiasm has sparked a proliferation

of popular managerial articles and books that utilize complexity models to explain everything

from strategy formation (Stacy, 1992; Beinhocker, 1999) to management practice (Wheatley

and Kellner-Rogers, 1996; Lissack and Roos, 1999); from product development (Brown and

Eisenhardt, 1998) to organizational development (Goldstein, 1994). This diversity in topic

and method is matched by differing expectations about how complexity should be

understood. Some authors think of complexity as a science (Dent, 1999), others see it as a

theory (Anderson, 1999a), and others consider it “collection of results, models, and methods”

(Cohen, 1999: 375). Some place its origin in the research leading to the Santa Fe Institute

(Waldrop, 1992), others mark its beginnings in the mathematics of deterministic chaos

(Gleick, 1987), while others locate its source in cybernetics and dynamic systems modeling

(Capra, 1996).

What is the essence of this diverse stream of writing and research? Is there a way to

organize the multiple approaches into a coherent framework? Why is such a broad range of

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The historical nature of our argument is reflected throughout the paper, thus all references are organized

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writing being labeled as “complexity”? In this brief review article I will offer a context for

answering these questions. I start by suggesting that “emergence” is the core issue that

integrates the majority of research being placed under the complexity banner. Next I outline

a typology (“the matrix”) for distinguishing between 13 complexity approaches. Then I

show how each of these approaches can support the development and testing of

coevolutionary theory. Finally I argue that the more self-conscious we can be about the

nature of complexity research, the more likely it is that complexity will emerge as a cogent

paradigm rather than a passing fad (McKelvey, 1999a).

THE SCIENCE OF EMERGENCE

Brief History and A Definition of Complexity Research

Research underlying what is being called “complexity” has existed for many decades.

Its origins, according to some complexity scholars (McKelvey, 1999a), are in Prigogine’s

research on “dissipative structures,” which explains how regimes of order come into being

and retain their form amidst a constant dissipation of energy and resources (Prigogine, 1955).

This idea became popularized in the 1960s and 1970s as general systems theory (von

Bertalanffy, 1968; Miller, 1978) and open systems (Kast and Rosenzweig, 1972), whose

applications were foundational to organization science (Lawrence and Lorsch, 1967;

Thompson, 1967; cf. Ashmos and Huber, 1987).

During this same period researchers in a wide variety of fields were experimenting

with non-linear models of dynamic systems. Several major schools of thought were born of

these explorations, including cybernetics (Weiner, 1948/1961), system dynamics (Forrester,

1961; Maruyama, 1963), computational genetic algorithms (Neumann, 1966), dissipative

by date order rather than alphabetically. References in the same year are listed alphabetically.

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self-organization (Prigogine and Glansdorff, 1971), complex adaptive systems (Holland,

1975), deterministic chaos theory (May, 1976), catastrophe theory (Zeeman, 1977),

synergetics (Haken, 1977), autopoiesis (Maturana and Varela, 1980), and fractals

(Mandelbrot, 1983). With Gleick’s (1987) best-selling book many of these approaches

became known as “chaos” theories. Some years later Lewin (1992) and Waldrop (1992)

developed syntheses of these models using “complexity” as an overarching framework.

These insights have been applied to management in new journals such as Emergence

(Lissack, 1999) and Nonlinear Dynamics, Psychology, and Life Sciences (Dooley, 1997) and

have been featured in several special issues, including the Journal of Management Inquiry

(Bartunek, 1994), Organization Science (Anderson, Meyer, Eisenhardt, Carley and Pettigrew,

1999), and the Journal of Business and Entrepreneurship (Black, 1999).

Each complexity theorist tends to specialize in one or two disciplinary methods for

studying complex dynamical systems; one goal of this article is to connect and begin to

integrate these various approaches. An overview of the breadth of these disciplinary

approaches is presented in Table 1. The table is based on overviews and summary accounts

by Gleick (1987), Lewin (1992), Waldrop (1992), Casti (1994), Cowan, Pines & Meltzer

(1994), Goerner (1994), Guastello (1995), Capra (1996), Elliott & Kiel (1996), Dooley

(1997), Eve, Horsfall & Lee (1997), Anderson, et al., (1999); Goldstein (1999), Marion

(1999), and McKelvey (1999a, 1999b). Undoubtedly some scholars will disagree with the

categorizations and brief descriptions of these disciplinary approaches; this list should

properly be thought of as an evolving framework (a complex adaptive system) that will

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change based on feedback from readers like yourself.3 Nevertheless, this table does provide a

starting point for bounding complexity research.

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Please See Table 1--Place about here
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The goal of this paper is not to provide yet another introduction to each of the

disciplines—the summaries that were used to develop Exhibit 1 do an excellent job of

accomplishing this task. Instead, our goal is to answer the question: What is the essence of

complexity research? What are complexity researchers trying to understand in the context of

management and organization theory?

In my view, each of these 13 disciplines of complexity explores the conditions,

properties, or processes of emergence in dynamic, complex systems. At its essence,

complexity researchers are providing new ways to understand how and why order emerges.

Formally, emergence means the creation of coherent structures in a dynamic system (Bushev,

1994; Holland, 1994). Most often emergence is designated as the process by which

“…patterns or global-level structures arise from interactive local-level processes. …[The]

combination of elements with one another brings with it something that was not there before”

(Mead, 1932: 641; in Mihata, 1997: 31).

The study of emergence has been a prominent topic in many fields, including

philosophy (Pepper, 1926; Bedau, 1997; Goldstein, 2000), social psychology (Allport, 1962),

sociology (Buckley, 1967; Eve, Horsfall and Lee, 1997), and organization science

(Dansereau, Yammarino and Kohles, 1999). Complexity researchers have argued that the

confluence of mathematical tools and computing techniques allow for an in-depth and

3
Please participate in the evolution of this list by e-mailing your comments to
Benyamin@mail.hartford.edu.

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rigorous exploration of emergence across a wide spectrum of system levels (Waldrop, 1992;

Cowan, Pines and Meltzer, 1994). How can this matrix of levels and approaches be

understood?

A Typology of Approaches for Studying Emergence

Each of the complexity disciplines listed in Table 1 explores emergence in a different

way. Thus, moving from a loose collection of metaphors to a rigorous scientific enterprise

(McKelvey, 1999a) requires a more in depth analysis. A useful beginning would be to

differentiate the disciplines according to their type of analysis (Crutchfield, 1994), and their

epistemic approach (McKelvey, 1999c). With these two dimensions a typology of

emergence disciplines is generated in Table 2, which can help management scholars find the

appropriate method for theory building and empirical testing.

The first dimension is presented by Crutchfield (1994), who distinguishes complexity

theories according to their different types of analysis—discovery, modeling, and intrinsic

emergence—referring to the aspect or quality of emergence each theory seeks to explain.

The first type refers to the discovery that something new has appeared in a complex system.

Fractal analysis or deterministic chaos theory fits into this category, the latter of which has

been used to discover order in apparently random time series. Chaos theory has been used to

identify periods of nonlinear interaction across a set of common factors in the early stages of

two innovation ventures (Cheng and Van de Ven, 1996), and the distributions of work

behavior in public service organizations (Kiel, 1994). Separately, through the mathematics

of self-organized criticality, significant regularities have been found in the size/structure

relationships across tens of thousands of businesses in the U.S. (Stanley et al., 1996). The

discovery of order at this level is in the eye of an observer: “Surely, the system state doesn’t

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know its behavior is unpredictable” (Crutchfield, 1994: 517). Thus, theories at this level

usually involve post-hoc analysis of time series that are “objectively” separate from the

researcher.

The second type refers to the modeling of emergence, in which computational or

mathematical systems are developed to represent system emergence. This level refers to

research streams that have deduced rules or heuristics from simple systems and used them to

develop modeling contexts in which order emerges over time. For example, Kauffman’s

(1993) “NK landscapes” have been used to model the order that can emerge in co-

evolutionary niches (Baum, 1999). Using different computational methods, system dynamics

has been used to model the unexpected outcomes of strategic decisions in complex systems

(Hall, 1976) and of theoretical assumptions in complex theories (Sastry, 1997). Other

examples of this level include self-organized criticality, which has been used to model the

behavior of stock markets (Bak, 1996), and catastrophe theory, which has been used to model

discontinuities in organizational behavior (Guastello, 1995), strategic change (Gresov,

Haveman and Oliva, 1993) and organizational transformation (Bigelow, 1982; Brown, 1995).

In this context, theorists are more involved in the emergence process, as they identify rules

and mathematical relationships that are used to computationally recreate emergent processes

in complex systems.

Crutchfield’s final type is “intrinsic emergence,” in which the increased capabilities

generated by the system’s emergence can be capitalized on by the system itself, lending

additional functionality to the system (1994: 518). In a sense, rather than a description of or

model about emergence, in intrinsic emergence the “observer” is a part of the system, and

thus “has the requisite information processing capability with which to take advantage of the

emergent patterns.” Behavioral descriptions of “dissipative structures” (Leifer, 1989; Smith

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and Gemmill, 1991) and organizations “at the edge of chaos” (Dubinskas, 1994; Brown and

Eisenhardt, 1997) fall into this category. To the degree that an agent within a complex

adaptive system [CAS] can extend its behavioral capabilities by learning over time (Gell-

Mann, 1994), studies on the evolution of CAS also fall into this category (Holland, 1995;

Macready and Meyer, 1999). Within this type of analysis, the process of emergence presents

insights that influence the development of the theories and to some extent of the theorists

themselves (Wilber, 1998; Lichtenstein, 2000a).

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Please See Table 2--Place about here
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The second dimension distinguishing these theories is based on the quasi-realist

epistemology that McKelvey argues is a basis for complexity science research (McKelvey,

1997; 1999c). His philosophical study is aimed at generating an epistemology for

organization scientists that recognizes the socially constructed meaning of terms without

lapsing into a form of relativism that eschews progress in understanding social systems. The

result is a “model-centered epistemology in which [organization] science is divided into two

independent activities” (McKelvey, 1999c: 289); one is a validation of the link between

abstract theory and formal model, the other validates the link between the model and the

phenomenal world. McKelvey’s distinction is depicted in Figure 1.

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Please See Figure 1--Place about here
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The first of these activities involves the coevolution of a theory and its formal model

which is an idealized—computational or laboratory—representation of the theory (Carley,

1995). In this view, theoretical adequacy is gained to the extent that the theory can explain

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model behavior. This activity is exemplified by the advances in NK models to represent the

theory of co-evolution (e.g. Baum, 1999; McKelvey, 1999b; Lewin, et al., 1999). Another

example is the use of simulated annealing to model the process of organizational design an

adaptation (Carley and Svoboda, 1996; Carley, 1998).

Secondly, parallel to confirming the computational adequacy of the theory-model

relationship, is generating trustworthiness and credibility in the relationship between model

and organizational reality, i.e. how well the model represents the real-world phenomena

within the scope of the theory (McKelvey, 1999a: 18). Here again, the model-phenomena

link is co-evolutionarily developed, leading to improvements in the model and at the same

time, better explanations of real-world behavior (McKelvey, 1999c: 289). Examples of this

activity include the use of dissipative structures models to explain organizational behavior

(Ulrich and Probst, 1984), strategic change (MacIntosh and MacLean, 1999), and

entrepreneurial development (Lichtenstein, in press), the use of system dynamics to explain

complex organizational failures (Hall, 1976), and the use of autogenesis to explain the nature

of organizing in dynamic and bureaucratic situations (Drazin and Van de Ven, 1985; Kickert,

1993). Additionally, NK models are being utilized to better explain the competitive

dynamics in particular industries (Sorenson, 1997).

Although some approaches can be used for both purposes, in general the theories of

complexity can be distinguished by which of the two activities they excel in. Some focus on

a computational approach to develop models that represent theory, others operationalize

these models in empirical studies that test the reliability and validity of the model in real-

world situation. At the same time, as we saw above, some disciplinary approaches have been

applied in both ways—generating models from theory, and testing them using

phenomenological data. Likewise, a single approach could well be used in more than one

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type of analysis in Crutchfiled’s sense. Thus, the matrix is much more complex than I am

making it out to be; yet it provides a basic framework that can help scholars distinguish

multiple frames of reference.

Key Assumptions of Complexity Theory

As a whole these disciplines offer a new basis from which to understand the nature of

organizing and management. According to some, this shift is so fundamental that it requires

an entirely new science for studying organizations (Overman, 1996). A good example is

given by Stevenson and Harmeling (1990: 3), who describe this new management science as

one in which:

...the most critical knowledge in our real world is not what “is,” but how various elements
of the universe relate and interact....[O]nly a brave new management science could begin
to bridge the great gulf between how things are done now and how they should be done
in the face of a rapidly changing future.

At the core of such a new science is a reframing of assumptions, which generate a new

“mental model” for researchers and practitioners of management. For example, Dent (1999)

suggests numerous differences between traditional management theory and an emerging

world view, including shifts from a focus on discrete entities to a focus on relationships

between entities (Bradbury and Lichtenstein, 2000), from language as representation to

language as action (Gergen and Thatchenkery, 1996), and from a solely selectionist approach

to one that sees adaptive self-organization as a complementary process to selection/retention

in evolutionary development (White, Marin, Brazeal and Friedman, 1997; Lewin and

Voldberda, 1999).

Perhaps the single most important of these shifts is a movement away from

explaining why change happens and toward explaining why and how order emerges in the

first place (Stevenson & Harmeling, 1990). The need for making this shift can be traced to

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an inaccurate definition embedded in original descriptions of open systems theories by

organization theorists (Lewin, 1936; Katz and Kahn, 1966; Thompson, 1967). Traditionally,

organizations (all social systems) have been seen as essentially stable entities, i.e. they exist

in a state of “equilibrium.” However, this perception is based on the definition of

equilibrium taken from mechanical engineering and physics, which define equilibrium as the

point of greatest stability, the state in which a system has the greatest likelihood of retaining

its internal order (Bettis & Prahalad, 1995). The goal of management, therefore, is to

maximize an organization’s “fit” with its environment (Drazin and Van de Ven, 1985) in

various ways (e.g. Lewin, 1936; Thompson, 1967.)

Unfortunately, this definition of equilibrium has been confused with the definition of

equilibrium used by thermodynamics, the science from which open systems theory was

developed (Prigogine and Stengers, 1984). In thermodynamic terms a system at equilibrium

contains absolutely no order whatsoever. Thus by definition neither natural nor social

systems can exist at thermodynamic equilibrium (Salthe, 1989; MacIntosh and MacLean,

1999). Instead, all organized entities are understood as dynamic structuring processes

continuously creating and re-creating internal order by maximizing the acquisition and

dissipation of resources (Schrodinger, 1944/1992; Nicolis, 1989; Drazin and Sandelands,

1992).

Why is this distinction important? In the mechanistic paradigm systems are assumed

to be stable, thus the question of organization theory is: “why and how do organizations and

their structures change?” (e.g. Van de Ven and Poole, 1995). In contrast, the new paradigm

is based on the assumption that change is the norm, so the key question of organization

science is reversed: “Why does order emerge, and how does it maintain its existence over

time?” Each of the complexity disciplines provides a different lens to explore that question,

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by focusing on a specific quality of emergence. These questions are particularly relevant in

the study of coevolution, which is aimed at understanding the emergence of coherent,

system-wide behaviors at multiple levels of analysis (Whittington, Pettigrew, Peck, Fenton

and Conyon, 1999). In the following section, I provide some initial suggestions for how

complexity disciplines can inform and extend current research on coevolution.

COMPLEXITY THEORIES IN COEVOLUTION RESEARCH

Advances in complexity science may help provide “a much needed theoretical footing

for coevolutionary research” (Lewin and Volberda, 1999: 528). Many of the key processes

in coevolution—adaptation on multiple levels, dynamic feedback loops, mutually causal

flows of knowledge across boundaries—are at the core of several complexity disciplines.

More importantly, the essential goal of coevolution—studying the adaptive changes within

and between all levels of organizational and environmental interactions—can be

operationalized in terms of emergence, the coming-into-being of “macropatterns that depend

on [continuously] shifting micropatterns” (Holland, 1998: 7). These potential contributions

can be drawn out through a review of Lewin, Long and Carroll’s (1999) “theory of

coevolution,” with additional context from Lewin and Volberda’s (1999) properties and

requirements for coevolutionary research.

In these coevolution models, firms seek a balance between exploitation and

exploration efforts over time, in order to remain competitive in changing environmental

circumstances (Lewin et al., 1999). These ongoing efforts are reflected in a firm’s legacy,

which encompasses firm level knowledge, capital, technological platforms, capabilities, as

well as characteristics of the industry. In this sense a firm’s legacy can be modeled as a

complex attractor (Marion, 1999), which, like strange attractors in deterministic chaos

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theory, provides a method for mapping the dynamics of interactive systems. This approach is

particularly useful for identifying the path dependency and historical embeddedness of firms,

key properties of coevolution (Lewin and Volberda, 1999).

According to this view, exploitation and exploration processes are complementary

means for optimizing organizational resources and design features in the face of multiple

environmental and path dependent constraints. Simulated annealing is a powerful method

for modeling this optimization process of strategic adaptation and change (Carley, 1998).

Simulated annealing is a theory-building tool that models solutions for a particular class of

design problems, “the need to locate the organizational design that optimizes organizational

performance subject to various constraints” (Carley, 1998: 29). By stripping the problem to

its core elements, it provides a framework for theorizing how organizations optimize

adaptive behaviors (Carley and Svoboda, 1996); the multi-level nature of the framework may

be especially useful for coevolutionary research.

Studying change at multiple levels simultaneously is at the heart of coevolution

research: “The theory assumes that organizations, industries and environments co-evolve” in

a multi-directional way (Lewin, et al., 1999: 536). This process of organization-environment

coevolution can be modeled as an NK landscape (Kauffman, 1993; McKelvey, 1999b). In

this class of models, competitive characteristics of adaptive entities (organizations, for

example) are reflected in a topological landscape that defines the relative fitness contribution

of each of those characteristics. By including an additional parameter, the “NKC” model

shows how changes in organizational fitness levels result in changes to the landscape itself.

Researchers have used this multi-level interactive approach to explore the coevolution of

capabilities and industries (Levinthal and Myatt, 1994), scientific invention and technological

innovation (Fleming and Sorenson, 2001) and inter-firm value chain networks (McKelvey,

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1999b). This complexity discipline thus offers a precise way to operationalize the multilevel

embeddedness of coevolution.

Complex adaptive systems offers an alternative approach for studying the emergent

behaviors of agents or populations adapting and coevolving in a computational context

(Holland, 1998). In complex adaptive systems, “agents adapt by changing their rules as

experience accumulates” (Holland, 1995: 10). In addition, “each change of strategy by a

worker alters the context in which the next change will be tried and evaluated. When

multiple populations of agents are adapting to each other, the result is a coevolutionary

process” (Axelrod and Cohen, 2000: 8). Studying this emergence process can generate

insights about the “mutual, simultaneous, lagged, and nested effects” of coevolution (Lewin

and Volberda, 1999). Perhaps more important, CAS as a discipline can help define

interaction process that hold across levels, which may allow researchers to identify similar

patterns acting in macroevolution and in microevolution (Axelrod and Cohen, 2000)

This search for similar patterns across scale can be aided by the mathematics of

fractals (Mandelbrot, 1983). The fractal notion of “self-similarity across scales,” and the

resulting topological mapping techniques used to uncover those often unseen patterns, has

been under-utilized by complexity scholars (Zimmerman and Hurst, 1990). Although the

operationalization of “fractal dimensions” may not yet be obvious in coevolutionary contexts,

the mathematics is a unique way to reveal whole-part relations that are a key to

understanding mutual adaptation processes.

A critical part of explaining interactions between and across levels is the feedback

loops that are involved. “The goal of coevolutionary inquiry is understanding how the

structure of direct interactions and feedback within organization-environment systems give

rise to their dynamic behavior” (Baum and Singh, 1994: 380). These bi-directional

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influencing processes are a central property of coevolution research, and system dynamics

provides a powerful means for modeling the non-linearities of these positive feedback

systems (Sastry, 1997). System dynamics forces researchers to carefully identify each

feedback process within an entire system; the rule-based computational model can reveal

hidden interdependencies and emergent characteristics that are not tractable using linear

thinking (Hall, 1976).

At a more micro level, cellular automata modeling could augment coevolution

research by examining the relationship between individual agent moves (e.g. strategic

adaptations) and the moves of that agent’s immediate neighbors (Krugman, 1996). For

example, the competitive dynamics of an industry can be modeled as rules that are followed

by an organization’s direct competitors, allowing for an examination of how firm-level

decisions are affected by others in its physical or competitive location. Like other

computation-based disciplines of complexity, the algorithmic tractability of the model makes

it easy to test many different configurations in a short period of time, thus speeding up the

theory-building process (Axelrod, 1984; Carley, 1996; Holland, 1998).

Whereas many of these computational models are grounded in structured rules that

mediate flows of behavior, deep structures and resource flows are also at the heart of the

qualitative theories of autogenesis/autopoiesis. Autogenesis is a theory of identity-making,

in which an agent’s core values and schemas define the rules that formulate emergent

structures (Drazin and Sandelands, 1992). The value of autogenesis/autopoiesis is its

conceptualization of the mutual causality of resource flows and environmental potentials

(Swenson, 1992; Swenson, 1997). According to the theory, entities (agents) are constituted

by flows of tangible and intangible resources; these flows provide the capability for

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accessing further regimes of resources, for example in the form of knowledge, opportunity,

and competitive advantage (c.f. Van den Bosch, Volberda and de Boer, 1999).

According to the theory of dissipative structures (Prigogine and Stengers, 1984),

when this resource flow moves to a far-from-equilibrium dynamic, whole-system structures

can emerge through the process of self-organization (Jantsch, 1980; Adams, 1988; Anderson,

1999a). In coevolutionary terms, environmental changes can spark major organizational

transitions, leading to the “mutation of new organizational forms from the existing stock of

organizations” (Lewin and Volberda, 1999: 529). A three-stage process of self-organized

change has been used to explain the success or failure of entrepreneurial ventures in rapidly

changing markets (Lichtenstein, 1998; Lichtenstein, 2000b); this model should be well suited

for studying emerging order in coevolution.

An important question is under what circumstances coevolutionary change will be

incremental or punctuated. According to Lewin, Long and Carroll (1999: 539-540), “During

periods of relative stability, organizations and populations change and adapt in [incremental]

ways, reinforcing the existing dominant organizational form.” In contrast, major

environmental dynamism can generate self-organized transformative change, as long as

certain path-dependencies are present. This is in fact an empirical question that can be

usefully modeled by two other complexity disciplines. Catastrophe theory shows that

virtually all adaptive change can be explained in terms of seven mathematical models; the

most common is the “cusp catastrophe,” which essentially differentiates between continuous

incremental change and discontinuous punctuated change (Bigelow, 1982; Gresov, Haveman

and Oliva, 1993). Guastello (1995) has used all seven catastrophe models in his analyses of

organizational behavior and change; and he has detailed an approach for accomplishing the

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nonlinear regressions of catastrophe theory by recasting each of the seven models as a

complex statistical equation in SPSS.

A central aspect of synergetics which is also present in catastrophe theory, is the

notion of an “order parameter.” In both theories, the system’s order parameter is the specific

quality (variable or construct) that differentiates between linear and nonlinear change

processes (Zuijderhoudt, 1990). The mathematics of synergetics, which were originally used

to develop the laser (Haken, 1977), might be usefully applied to coevolution as a search for

the condition or set of conditions that can trigger change and adaptation at the organizational,

population, or cultural level.

According to Lewin, Long and Carroll (1999: 541), as organizations or populations

adapt in highly dynamic environments, the successful ones will evolve to a critical balance

point, “that balance between order (the pull of exploitation) and disorder (the pull of

exploration) that is often called ‘the edge of chaos.’ At this point of dynamic tension, truly

novel emergent behavior can occur.” Many complexity scholars equate organizing in this

dynamic tension with the state of medial interdependence in an NK landscape (Brown and

Eisenhardt, 1998; Anderson, 1999; Clippinger, 1999), others argue that the “edge of chaos”

is a misnomer for social system behavior (Mitchell, Crutchfield & Hraber, 1994). Instead,

this dynamic, self-organized behavior (Anderson, 1999a) might be better modeled in terms of

self-organized criticality (Bak and Chen, 1991; Bak, 1996). A system in this state is highly

adaptable yet stable, exhibiting mostly small changes interspersed with a few large-scale

transformative shifts (Bak, 1996). Since the frequency of system changes over time takes the

signature form of a power law (Bak and Chen, 1991), the mathematics of self-organized

criticality may be useful for identifying how close a coevolving organization or population is

to reaching that dynamic, self-organized state.

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 Finally, emergent evolution provides a broad theoretical foundation for coevolution,

by explaining the contingent differences in institutional factors and “extra-institutional

environments” in terms of a continuous expansion of developmental capacities conditioned

by localized constraints (Jantsch, 1980; Leifer, 1989; Wilber, 1995; Swenson, 1997).

Coevolutionary variation is represented by the emergence of new levels of self-organized

order, which then undergo selection and retention according to the well-known processes of

organizational evolution (White et al., 1997; Aldrich, 1999). As such, co-evolutionary

change can be understood as a coherence of factors at multiple levels (individual,

organizational, institutional, socio-cultural), with an overall direction of increased

information, communication, trust, interdependence, and managerial development (Torbert,

1991; Wilber, 1995; 1998; Lichtenstein, 2000a). This optimistic yet challenging framework

is well expressed in many of the managerial applications of complexity theory, which

represent an important stream of research that is complementary to the more mathematical

forms (e.g. Kelly and Allison, 1999; Lissack and Roos, 1999; Petzinger, 1999).

CONCLUSION

The interdependence of qualitative and quantitative research is equally important in

coevolution as it is in complexity theory. For example, many of the empirical papers in the

Organization Science special issue on “Co-evolution of strategy and new organizational

forms” (Lewin and Volberda, 1999) utilize quantitative statistics, visual time series, and

qualitative analyses to exemplify distinctions across a small number of cases (e.g. Koza and

Lewin, 1999; Webb and Pettigrew, 1999). In these papers it is the bridging between

qualitative and quantitative that informs and gives meaning to the analysis as a whole .

19
 In the same way, the fullest interpretations and generalizable meanings of complexity

theory may only be realized when mathematical modeling techniques are seen as

complementary to case study analysis using careful operationalizations and analogical

reasoning (e.g. Sorenson, 1997; Lichtenstein, 1998; McKelvey, 1999b). At present, this

multi-disciplinary approach is not well developed; complexity research is being framed by

many as a mathematical modeling endeavor. This bias is clearly cited by Morel and

Ramanujam (1999: 289) who conclude their article by saying, “Application of complex

systems theory to organization theory must rely on mathematically proven or

computationally justified facts….Whenever dynamics is involved, there is no good

alternative to mathematical modeling.” 4

However, this approach of theory-model development leaves out the complementary

aspect of model-phenomenon testing (McKelvey, 1999c). As McKelvey has shown, both of

these activities are interdependent and necessary in order to generate an overall theory that is

epistemically realistic while retaining high face validity (McKelvey, 1999a). This argument

certainly holds in coevolutionary research, which promises a rigorous analysis of multiple

factors that can be leveraged to improve the adaptability and performance of firms and

industries in hypercompetitive circumstances.

For these reasons, I am advocating for a multi-disciplinary approach to complexity,

one that would include both the mathematical modelers and the qualitative researchers and

all those in between. Furthermore, using the arguments from path dependence, by

institutionalizing an openness to multi-disciplinary work at this early stage of paradigm

development, we create an opportunity for unexpected approaches and collaborations to

emerge over time. As a result I believe a matrix of complexity will increase the chances that

4
Of the seven empirical or theory-building articles in the Organization Science special issue on complexity,

20
our insights about emergence and coevolution will become more than a fad, offering a

significant contribution to academic scholars throughout the social sciences, and

management practitioners throughout the business world.

six either utilize or operationalize mathematical simulations.

21
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 TABLE 1: Summary of Complexity Disciplines for Understanding Emergence

RESEARCH INSIGHTS FROM THEORY MANAGERIAL INSIGHTS FROM THEORY MANAGEMENT

STREAM REFERENCES
Fractals Natural systems exhibit self-similarity across scales, Organizations exhibit self-similar behavior and/or Zimmerman and Hurst,
and can be rigorously measured using partial values across levels (e.g. individual, group, company- 1990
dimensional (“fractal”) mapping. wide.)
Deterministic Emergent order (attractors) can be identified in data Strange attractors are “basins of attraction” toward Kiel, 1994; Thietart and
Chaos Theory that appears random. Dynamic systems are highly which organizational behaviors tend. These attractors Forgues, 1995; Cheng
sensitive to initial conditions (i.e. Butterfly effect). can be statistically identified in time series data. and Van de Ven, 1996
Changes in attractors may imply learning and/or
organizational transformation.
Self-Organized Certain dynamic systems evolve to a state in which Specific strategies and organizational processes can Carneiro, 1970;
Criticality all changes are related through a single power-law. generate dynamic structuring at the “edge of chaos.” Stanley et al., 1996
This dynamic strategy/structure supports high
innovation and creativity in organizations.
NK Landscapes Organisms and environment co-evolve. The An organization and its market environment co-evolve. McKelvey, 1999b;
“fitness” of an organism depends on the overall The “fitness” of an organization depends on its Levinthal & Warglein,
fitness of its environment, and vice versa. environmental influence, and vice versa. Value chain 1999; Fleming and
relationships can be effectively modeled, and new Sorenson, 2001
value chain strategies generated, using this approach.
Cellular Programmed entities (cellular automata) display Strategic moves are constrained by the Axelrod, 1984; 1987;
Automata; complex emergent patterns as they evolve toward a decisions/behaviors of one’s immediate neighbors; Krugman, 1996
Game Theory critical value; this value became known as the these constraints generate emergent patterns in
“edge of chaos.” computer simulations.
Simulated Computer models simulate order that emerges in Organizational adaptation and learning can be modeled Carley and Svoboda,
Annealing certain physical and/or chemical annealing as a simulated annealing process, in which optimal 1996; Carley, 1998
processes moves are constrained and made possible by local
conditions which change over time.
Synergetics High-energy systems generate emergent order when The emergence of group behavior can be explained Haken, 1984;
linear changes in one parameter spark non-linear through shifts in “control” parameters that generate Zuijderhoudt, 1990
shifts in another. non-linear affects in organizational order.

31
 Catastrophe Transformative change can be qualitatively Transformative organizational change can occur Bigelow, 1982;
Theory modeled to show how incremental change across incrementally or in a punctuation. Re-analysis of Guastello, 1995;
one parameter (variable) creates “catastrophic” behavioral data using non-linear catastrophe models Gresov, et al., 1993
(punctuated) changes across another. explains up to 400% more variance than the same data
analyzed using linear regression models.
System Dynamics Positive/negative feedback loops can be mapped, Multi-level dynamic interactions across systems can be Hall, 1976; Sastry, 1997
allowing for a systematic experimentation of modeled, showing how and why unexpected behavior
dynamic conditions in very complex systems. occurs in complex systems. These models can be used
to find “leverage” points that avoid unintended effects.
Autogenesis/ Some dissipative structures can self-generate and Organizing processes self-replicate their internal order, Pantzar and Csanyi,
Autopoiesis self-replicate their internal order. Autogenic based on a deep structure that generates rules and more 1991; Drazin and
systems (like “mind” are self-organized and display visible operations. Rule creating and rule following Sandelands, 1992
emergent behavior. behavior is an emergent, self-organized process.
Complex Interdependent semiautonomous agents, acting from Emergent organizational behavior may result naturally Holland, 1995; Dooley,
Adaptive Systems even a few simple rules, generate emergent system due to ongoing double interacts that follow from very 1997; Anderson, 1999b;
behaviors. simple rules. These emergent behaviors may be used Axelrod and Cohen,
for learning or to develop new strategies. 2000.
Dissipative New levels of order self-organize in nonequilibrium Groups and organizational systems can maintain Smith, 1986; Wicken,
Structures dissipative structures. Emergence is a self- themselves at a high degree of structural order by 1986; Adams, 1988;
amplifying process sparked by fluctuations, dissipating large amounts of energy, information, and Lichtenstein, in press.
resulting in greater system capacity. resources.
Emergent Evolution is a self-organizing process that creates Organizational co-evolution is a combination of Leifer, 1989; Torbert,
Evolution new forms, which then undergo natural selection variation-selection-retention and non-linear adaptation. 1991; White et al., 1997;
processes. The universe has experienced an Long-term development involves a multiple series of Wilber, 1998;
increase in complexity across evolution. transformations, requiring action learning and Lichtenstein, 2000
transformations of managerial capability and
development.

32
TABLE 2: “The Matrix” of Complexity – One Typology of Disciplines

Theory-Model Model-Phenomenon
Development Testing

Discovery Fractals Deterministic Chaos Theory

of Order:

Modeling NK Landscapes NK Landscapes

Emergent Genetic Algorithms/ Self-Organized Criticality
Order: Cellular Automata Catastrophe Theory
Simulated Annealing System Dynamics
Synergetics Autogenesis/Autopoiesis

Intrinsic Complex Adaptive Systems Dissipative Structures

Emergence: Emergent Evolution

33
FIGURE 1: McKelvey’s Semantic Conception Of Organization Science

Theory Model Phenomena

Axiomatic
Base

34