Heterarchy is a complex adaptive system of governance, an order with more than one governing principle. Heterarchies include elements of hierarchies and networks, but in a number of important ways, heterarchies are different from both of these systems of governance. The model of heterarchical governance is like plate tectonics: mutually self-contained orders with unclear hierarchies among them. Whenever agents choose A instead of B, B instead of C, and C instead of A, a logical contradiction arises. This contradiction – also known as a value anomaly – characterizes genuine choices. Some organizations and firms, but also legal systems, markets, or even the human brain can be regarded as complex systems that manage the value anomaly by operating with multiple mutually incompatible ordering principles. Such a management – as opposed to a mere elimination – of these mutually incompatible values allows these systems to better cope with uncertainty, and to benefit from the recognition of complexity. One of the central implications of these heterarchical systems is that there is no single scale on which unequals can be compared and, consequently, that commensuration is an active process which involves friction and opportunities for entrepreneurship. We argue that in a world that naturally seems to be characterized by these value anomalies, heterarchical organizations and, in particular, heterarchy as a complex system of valuation might well be a good response.
Dekker, E, & Kuchař, P. (2017). Heterarchy. In Encyclopedia of Law and Economics (pp. 1–5). doi:10.1007/978-1-4614-7883-6_640-1