Browsing by Author "Bhardwaj, Akhil"

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    The architecture and governance of complex artifacts
    (IE University, 2020-05-04) Bhardwaj, Akhil; Ketokivi, Mikko; https://ror.org/02jjdwm75
    The world is populated with complex artifacts, i.e., purposefully designed complex systems encompassing both technology and human actors. Identifying the root cause of their failures challenges the limits of managers’ comprehension, and impedes efficient contracting. In response, managers adopt a reductionist approach predicated on the assumption that complex technical systems can be effectively decomposed, i.e., partitioned according to the systems architecture. To evaluate the validity of the assumption of such partitioning for these complex technical systems, I consider locomotive engine failures. These locomotive engines are complex technical systems, and I find they are not decomposable. To facilitate more efficient contracting for these complex technical systems, I suggest that contracts be aligned to identified boundaries of decomposability. Because some complex technical systems are not decomposable, managers are sometimes unable to identify definitively the root causes for failures of these systems. When mangers are unable to identify the root causes of failure, there is a high likelihood of disagreement between transacting parties. Managers that default to invoking opportunism to explain ill-understood failures of complex technical systems, and enforce the letter of the contract, are likely to cause contract termination. Because failures of complex technical systems can cause catastrophic damage, the interests of transacting to mitigate failure is posited to be a shared goal. To attenuate the contracting problem that arises due to the inability of mangers to identify the root causes of artifact failures, I develop a framework that addresses managers’ contractual choices to coordinate better high-reliability artifacts. I submit that aligning decision rights with expertise, contracts that empower those with greater local knowledge, and unanticipated outcomes in the technical system that receive subsequent managerial attention can lower the likelihood of artifact failures occurring due to contracting and technical reasons.