What is the influence of organizational structure?
|
 Show
Under a Creative Commons license Open access AbstractDespite the widespread use of value-based management (VBM) in European companies, studies investigating the reasons for the differences in its sophistication remain scarce and are predominantly focused on environmental and intra-organizational aspects. Since the structure of a firm as a major organizational determinant is assumed to have a considerable impact on the fit between an organization and an administrative innovation, we examine the influence of organizational structure on VBM sophistication. Based on survey data from 117 large for-profit firms in Austria, Germany and Switzerland, our findings indicate that the organizational structure variables centralization, formalization and horizontal integration are positively associated with VBM sophistication. Our data provide insight into the interconnection of specific organizational structure variables on particular VBM subdimensions. The findings illustrate that a high level of centralization is positively associated with the political fit of an organization with VBM, while vertical differentiation seems to have a negative relationship with the cultural fit with VBM. High levels of formalization and horizontal integration indicate a technical, political and cultural fit with VBM, which helps to achieve and prevail a high extent of VBM implementation in late diffusion stages. While firms that are listed on the stock market show a positive association with VBM sophistication, the interconnections of organizational structure variables with VBM sophistication appear both in listed and unlisted firms. KeywordsValue-based management (VBM) Shareholder value Diffusion theory Organizational structure Organizational fit Management accounting innovation (MAI) PLS-SEM Cited by (0)© 2022 The Author(s). Published by Elsevier Ltd. Factors Affecting Organization StructureOrganization structure is designed keeping in view the following factors: 1. Strategy:Strategy determines a course of action to direct various organizational activities. It makes plans to co-ordinate human and physical resources to work towards a common objective. Strategy is pre-requisite to organization structure and also follows it. The relationship between strategy and organization structure is depicted as follows:
Strategies to diversify product lines or markets require decentralized transition as decision-making is done at wider level and strategies for organizations working in stable environment. Where managers do not diversify their operations, require a centralized organization. 2. Technology :The technology for manufacturing goods and services also affects the organization stricture. In case of mass production technology, mechanistic organization structure is more appropriate, while in case of continuous production or small scale production technology, the appropriate from is organic structure. This is because mass production technologies involve standardization and specialization of work activities and continuous or unit production technologies require low levels of standardization and specialization. 3. People:Organization structure defines work, groups it into departments and appoints people to run those departments. People at different jobs must possess the skill, knowledge and efficiency to accomplish the related tasks. 4. Tasks :Activities performed by people who transform organizational plans into reality are known as tasks. Various task characteristics are: (a) Skill variety:It is the extent to which creativity and variety of skills and talents are required to do a task. People with high degree of task varieties (for example, a dress designer ) perform tasks that increase their intellectual ability and give them high job satisfaction. (b) Task identity:Whether to produce a product in whole or in parts determines its task identity. When a product is produced as a whole, it has greater task identity. People performing tasks with high task identity y (for example, a computer programmer) perform various job functions related to that task from beginning to the end, derive job satisfaction out of their work and feel motivated to repeat those tasks. (c) Task significance:The importance of task affecting the well-being or lives of people working inside and outside the organization determines significance of the task. People performing tasks with high task significance, i.e., tasks which positively affect the well-being and safety of others (for example, a traffic police inspector), feel satisfied with their job performance and perform work of high quality and esteem. (d) Autonomy: Whether or not an individual plans the task on his own determines autonomy of It determines the extent to which a person
enjoys t freedom of performing various (e) Feedback:It is the information that people receive about successful completion of their task. 5. Decisions: Centralized decision-making powers give rise to mechanistic structures and decentralized decision-making processed give rise to organic or behavioral structures. 6. Informal organization:Informal organizations are and outgrowth of formal organizations. Social and cultural values, religious beliefs and personal likes and dislikes of members which form informal groups cannot be overlooked by management. 7. Size:A group known as Aston Group conducted research on firms of different sizes and concluded that as firms increase in size, the need for job specialization, standardization and decentralization also increases and organizations are structured accordingly. 8. Environment:Organization structure cannot ignore the effects of environment. Organizations must adapt to the environment, respond to incremental opportunities and satisfy various external parties such as customers, suppliers, layout unions etc. In case of stable environment where people perform routine and specialized jobs, which do not change frequently, a closed or mechanistic organization structure is appropriate. 9. Managerial perceptions:Organizations where top managers perceive their subordinated as active, dynamic and talented entrepreneurs, prefer organic form of structure, If they hold negative opinion about their subordinates, they prefer mechanistic organization structure. For more help in Factors Affecting Organization Structure click the button below to submit your homework assignment How does organizational size influence the structure?When a small organization becomes a big organization, the change in size will have a large impact on the structure of the organization. The organization will have to use more work specialization, more departmentalization, and more formalization in order to operate efficiently.
What is the importance of organizational structure?Organizational structures are important because they help businesses implement efficient decision-making processes. By assigning specialized roles to lower-level employees, businesses can make better decisions faster.
How does the organizational structure impact its success?While organization is necessary for success, the structure can influence the project management process. A company's organizational structure may dictate the level of project management, who makes ultimate project decisions, the communication of project goals and tasks and how the project manager works with his team.
|
