Watercooler chat, organizational structure and corporate culture by Newton, Wait and Angus, just released as a working paper.
Abstract:
Modeling firms as networks of employees, occasional collaborative decision making around the office watercooler changes long run employee behavior (corporate culture). The culture that emerges in a given team of employees depends on team size and on how the team is connected to the wider firm. The implications of the model for organizational design are explored and related to empirical research on communication, innovation, the size and decision making of corporate boards and trends in the design of hierarchical structures.