Organic Organization as an Information-Generating System: A Semi-Formal Information-Theoretic Model of Decentralized Structures

Abstract

This paper proposes an information-theoretic framework for analyzing organizational structures, with particular focus on the distinction between centralized hierarchical systems and loosely coupled, decentralized organizations. While existing theories emphasize efficiency, adaptability, or normative values such as democracy, we argue that the core structural difference lies in whether an organization is capable of generating information rather than merely transmitting or compressing it. We introduce a semi-formal model in which organizations are treated as information-processing systems composed of semi-autonomous cognitive agents. Within this framework, we show that vertically centralized management structures necessarily function as lossy information bottlenecks, whereas decentralized, loosely coupled structures enable information gain through multi-source integration and negotiation. We further propose a novel information-theoretic definition of organizational "organicness" and derive necessary structural conditions for information-generating communication. This model offers a unifying theoretical account connecting organizational theory, information theory, and social epistemology.