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                 cator systems,. An indicator  system must consider what comprises the capital stock, what  comprises the
                 flow,  and what quantity  of the  flow  can be used  sustainably (e.g., fishing  as addressed by  Rudd,  2004)
                 or  is targeted  (e.g., economic  growth).  When  an  indicator  system  is available, a threat to  capital  assets
                 or a pressure state  can be represented  in terms of a difference  between the (expected) values  of an indi-
                 cator and the desirable ones.
                 INSTITUTIONS  AND ECONOMIC   AGENTS

                 Institutions  are  'rules-in-use'  that  influence  actor  (economic  agent) incentives  and behaviors. They  in-
                 clude  both  norms  and rules.  The  IAD  framework  distinguishes  three  main  situations  in  which  institu-
                 tions  operate:  operational  (ecosystem  operations)  in  which  the  focus  is  on  the  day-to-day  impacts  of
                 rules and norms; collective choice and constitutional. The focus  in collective action situations is on the
                 types  of  rules  that  are  chosen  for  the  activity.  Rules  can  be  input-  or  output-oriented,  production-  or
                 conservation-oriented,  or  regulatory-  or  market-oriented.  At  the  constitutional  level,  the  focus  is  on
                 whom  has  the  rights  and  power  to  set  lower  level  rules  regarding  access  to,  and  utilization  of,  re-
                 sources.

                 In response to the  (emerging) pressure state, the relevant governing entities may perform  ecosystem re-
                 design  experiments.  The  effectiveness  of  various  design  options  is  compared  and  evaluated  with  re-
                 spect to the indicator  systems. The factory  and its workers exist in the ecosystem and rely on its capital
                 assets.  In particular, the economic  agent has to account  for  its use of capital  assets using indicator sys-
                 tems that  are  also  meaningful  to the  stakeholders  in the  ecosystem.  For  certain  capital  assets,  such  as
                 the  financial  assets, strict  control  procedures  are enacted.  For other assets,  such  as the decision  objects
                 related to social and natural capital there is less need  for control and more room for  self-regulation.


                 DECISION  OBJECTS AND THEIR  HIERARCHIES

                 The  main  items  influencing  the  decision-making  are:  (i) The  decision  objective  or  set  of  objectives  a
                 decision  has to  meet.  Objectives  indicate which  types  of performances  are targeted.  Global  objectives
                 refer  to  the  entire  production  system  and,  according  to  the  principle  of  coordination,  are  consistently
                 detailed to give local  objectives to all (produc-tion)  units; (ii) The decision variables are the items upon
                 which a decision-maker  can make decisions that al-low him or her to reach the objectives. The decision
                 criteria guide the choice of the decision-making;  (in) Constraints are the limitations  on possible  values
                 of variables. Decision constraints limit the freedom  of a decision-maker to select any arbitrary value  for
                 its decision variables;  (iv) A performance  indicator is an aggregated piece  of information  allowing the
                 comparison of the performance  of the  system to the system's  objectives. Performance  indicators  should
                 be consistent with objectives  because  it is necessary to compare performances  targeted  (objectives)  and
                 performances  reached  (indicators), and with decision variables because those variables will have  an  ef-
                 fect  on the performance  monitored (controllability).
                 David  Cochran's  Manufacturing  System  Design  Decomposition  (Cochran  et al., 2001)  offers  a tool to
                 separate objectives  from the means to achieve them, to relate low-level activities and decisions to high-
                 level  goals  and  requirements,  to  understand  the  interrelationships  among  the  different  elements  of  a
                 system design,  and to effectively  communicate this  information  across the organization. Figure  1 (Part
                 A) illustrates the decision-object  hierarchy for the top objective  of maximal  return  on investment.  In an
                 advanced  factory  governance  system,  also the  decision-object  hierarchies  for  other top  objectives  such
                 as safety, health, security, environment,  and disaster reduction are defined.  Safety  and health  objectives
                 are  expressed  with respect to human  capital.  Security-  and  disaster-reduction  objectives  are  expressed
                 with  respect  to  several  kinds  of capital,  with  action  means  in the realm  of the  social  capital.  Environ-
                 ment objectives  are expressed with respect to natural capital stocks and  flow.
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