Grounding Sociology in System Science Socio-Economic Theory Network (M) New Directions in the Theory of Organizations

Abstract

This paper uses Transaction Byte Analysis (TBA) to ground sociology in system science. No relationship or organisation can exist without some sort of communication that can be measured in bytes. The transmission or storage of bytes involves physical changes in materials or in energy states subject to scientific laws. Information overload and bounded rationality can be explained by the physiological and neurological limits on the ability of individuals to receive, store, process or communicate bytes and so information, knowledge and wisdom. The laws of requisite variety in communications, control and decision-making provide additional criteria for evaluating and/or designing social systems and organisations with unreliable components. The power of TBA is illustrated by showing how the nested network of firms around the town of Mondragón in Spain follows the strategies used in nature to create and manage complexity through simple components. Unlike many other organisational theories, TBA accepts that individuals can be either, or both, trusting/suspicious, cooperative/competitive and/or altruistic/selfish. TBA is compared with Transaction Cost Economics (TCE) which it subsumes when costs represent a proxy for information. Unlike TCE, TBA can be applied to any type of social institution to provide the foundations for a “science of organisation”