Hierarchical structures in organisations: A conceptual framework

The paper gives a general framework which allows us to study various hierarchical structures of an organisation. It provides a unified view on hierarchical algorithms, hierarchical planning, principal–agent relationships, and hierarchical negotiations. The main idea is to describe an organisation as a superposition of interfering individual decision processes resulting in a pair of functional equations. Different specifications of these equations allow us to characterize the above mentioned hierarchical phenomena. Since management can be considered as a planning and leadership activity to control the interrelationship of individual decision processes, the paper gives a contribution to a better understanding of the general structure of the management process.