A Computer Simulation Test of the M-Form Hypothesis

This research began in the summer 1978 with the support of the Danish Social Science Research Council. Thanks go to Ms. Margaret Figueroa, the first author's research assistant. A grant from the Duke University Research Council supported her efforts. This research tests Williamson's M-form hypothesis which posits an information imperative of organizational form instead of a technology imperative. The experimental design is a two-by-two factorial design. Two levels of decomposability of technology are the values for the first variable. The multidivisional form (M-form) and the unitary (U-form) are the values for the second variable. The data are generated from a perturbed decomposed mathematical programming model that is coordinated by a Dantzig-Wolfe pricing approach. The data are analyzed using the Kruskal-Wallis nonparametric approach. The results substantiate Williamson's hypothesis that the M-form of organization is superior to the U-form organization alternative. For each of the two levels of decomposability of technology, the M-form of organization yields higher profit solutions than the U-form.