This paper presents an agent based model for analyzing the effect of management style formalization. Companies tend to formalize their management style with the growing in size of organization in order to maintain or enhance their organizational performance and profitability. However it may damage member’s motivation or entrepreneurship, and it may decline potential for sustainable growth of organization. Based on these considerations, we assume that underlying conflicts between organizational performance and member’s motivation exist in organization, and management style formalization may affect on the conflict. We propose an agent based model which consists of organization utility and individual utility functions which represent business model of organization, and member’s experience and value. The results of agent based simulation experiments demonstrate that management style formalization increases organizational performance while decreasing individual motivation. On the other hand, keeping the informal management style makes organizational performance decline while increasing member’s motivation. The simulation results also suggest that the informal networks can mitigate the disadvantage of management style formalization.
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