Yingyi Qian, Gerard Roland and Chenggang Xu

Published June 2003

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We model the coordination of specialised tasks inside an organisation as 'attribute matching'. Using this method, we compare the performance of organisational forms (M-form and U-form) in implementing changes such as innovation and reform. In our framework, organisational forms affect the information structure of an organisation and thus the way to coordinate changes. Compared to the U-form, the M-form organisation achieves better coordination but suffers from fewer economies of scale. The distinctive advantage of the M-form is flexibility of experimentation, which allows the organisation to introduce more innovation and reform. The theory is illustrated by the organisational differences between China and the former Soviet Union and sheds light on their different reform strategies, particularly with regard to the prevalence of the experimental approach in China.