Organization Design — A Set Theoretic Decision Model for the Reinsurance Enterprise

The aim of the paper is to support reinsurance executives who have to decide about an organizational framework structure for their enterprises. To provide the support a decision model is constructed that relieves the decision-makers of parts of their own modelling tasks. The model is formulated in set theoretic terms to connect it to the methodological basis of the structuralist philosophy of science and to prepare the ground for computer simulation. The central assumption of the model is that the quality of coordination is influenced by disruptive factors associated, most notably, with interdependencies between organizational units and the competence-based splitting of markets and resources. The utility creation of an organizational structure is consequently determined by its degree of success in alleviating these disruptive factors — since they cannot be avoided altogether. The outcome of the study is that critical attributes of the disruptive factors are identified and recommendations are formulated as to the organizational actions that should be taken in order to safeguard the desired attributes of these factors.