Working Paper | HBS Working Paper Series | 2014

Facts and Figuring: An Experimental Investigation of Network Structure and Performance in Information and Solution Spaces

by Jesse Shore, Ethan Bernstein and David Lazer

Abstract

Using data from a novel laboratory experiment on complex problem solving in which we varied the network structure of 16-person organizations, we investigate how an organization's network structure shapes performance in problem-solving tasks. Problem solving, we argue, involves both search for information and search for solutions. Our results show that the effect of network clustering is opposite for these two important and complementary forms of search. Dense clustering encourages members of a network to generate more diverse information, but discourages them from generating diverse theories: in the language of March (1991), clustering promotes exploration in information space, but decreases exploration in solution space. Previous research, generally focusing on only one of those two spaces at a time, has produced an inconsistent understanding of the value of network clustering. By adopting an experimental platform on which information was measured separately from solutions, we were able to bring disparate results under a single theoretical roof and clarify the effects of network clustering on problem-solving behavior and performance. The finding both provides a sharper tool for structuring organizations for knowledge work and reveals the challenges inherent in manipulating network structure to enhance performance, as the communication structure that helps one antecedent of successful problem solving may harm the other.

Keywords: Networks; Organizational Structure; Performance;

Citation:

Shore, Jesse, Ethan Bernstein, and David Lazer. "Facts and Figuring: An Experimental Investigation of Network Structure and Performance in Information and Solution Spaces." Harvard Business School Working Paper, No. 14-075, March 2014. (Revised June 2014.)