Hospital Organizational Structure and Information Processing: An Entropy Perspective

Abstract

Organizational structure enables organizations to achieve their goals. The chosen organizational structure determines, to a large extent, the flow of information streams and the manner and extent to which roles, power, and responsibilities are delegated and coordinated to achieve the organization’s goals. In this study, we applied information theory with entropy as the central concept to assess the effectiveness and costs of an organizational structure and its coordination processes. Entropy was used to measure the amount of uncertainty associated with probabilistic events. In the context of organizational design, entropy values can be assigned to specific organizational structures to gain insights into the factors that lead to delays in decision-making. We used Shannon’s entropy theory to quantify Galbraith’s organizational structure and coordination process as applied to the perinatology care system of Radboud University Medical Centre in the Netherlands. Our entropy analysis provided insights into how departments should be partitioned and which coordination mechanisms should be used to achieve organizational goals, such as minimizing delays in decision-making. Particularly, two types of entropy appear to be important: positional entropy and task allocation entropy. These are different dependent variables on the organizational design scenarios. Our analysis shows that entropy is one method to determine optimal organizational structures and coordination processes. Entropy can be used as a concrete way of assessing the effectiveness of organizational design given the level of uncertainty of the environment and the required speed of decision-making.