Supply networks as a complex adaptive system: toward simulation-based theory building on evolutionary decision making

Anand Nair, Ram Narasimhan, Thomas Choi

Research output: Contribution to journalArticle

53 Scopus citations

Abstract

In this article, we examine how the firms embedded, in supply networks engage in decision making over time. The supply networks as a complex adaptive system are simulated using cellular automata (CA) through a dynamic evolution of cooperation (i.e., "voice" decision.) and defection (i.e., "exit" decision) among supply network agents (i.e., firms Simple local rules of interaction among firms generate complex patterns of cooperation and. defection decisions in the supply network. The incentive schemes underlying decision making are derived through different configurations of the payoff-matrix based on the game theory argument. The prisoner's dilemma game allows capturing the localized decision-making process by rational agents, and the CA model allows the self-organizing outcome to emerge. By observing the evolution of decision making by cooperating and defecting agents, we offer testable propositions regarding relationship development and distributed nature of governance mechanisms for managing supply networks.

Original languageEnglish (US)
Pages (from-to)783-815
Number of pages33
JournalDecision Sciences
Volume40
Issue number4
DOIs
StatePublished - Nov 1 2009

Keywords

  • Cellular automata
  • Complex adaptive systems
  • Complexity theory
  • Supply networks
  • Theory building

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Strategy and Management
  • Information Systems and Management
  • Management of Technology and Innovation

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