Hidden structure

Description

"An intermediary can choose between functioning as a marketplace, on which suppliers sell their products directly to buyers, or as a reseller, purchasing products from suppliers and selling them to buyers. In our model, this choice comes down to whether residual control rights over non-contractible decision variables are better held by suppliers (the marketplace mode) or by the intermediary (the reseller mode). We focus on a single non-contractible decision variable - the level of demand-enhancing marketing activities. The reseller is better able to coordinate these activities across products, whereas the marketplace mode benefits from allowing independent suppliers to tailor their marketing activities to local information about buyer demand. In the benchmark setting, the marketplace mode is preferred if and only if the variance of local information exceeds the squared value of spillovers from marketing activities across products. We explore several generalizations, showing how the benchmark tradeoff is modified in different settings."

Description

"In this paper, we describe an operational methodology for characterising the architecture of technical systems and demonstrate its application to a sample of software releases. Our methodology is based on network graphs and allows us to identify define three fundamental architectural patterns, which we label core-periphery, multi-core, and hierarchical. Applying our methodology to a sample of 1,286 software releases from 17 applications, we find that 67 -- 89% of releases possess a \"core-periphery\" architecture under our classification scheme. This architecture is characterized by having a single dominant cyclic group (the Core) that is large relative to other cyclic groups and above a threshold with respect to system size. We find that the size of the Core varies widely, even for systems that perform the same function. These differences appear to be associated with different models of development -- open, distributed organizations develop systems with smaller Cores, while closed, co-located organizations develop systems with larger Cores. Our findings represent a first step in establishing some \"stylized facts\" about the fine-grained structure of large, real-world technical systems."

Subjects

Series Statement

• Working paper / Harvard Business School -- 13-093

Other Editions

• Hidden structure: using network methods to map system architectureHarvard Business School2013-01-01
• Hidden structureHarvard Business School2013-01-01