The Importance of a Proper Organizational Structure for Optimizing the Corporate Activities of Small, Medium or Large Firms – Research Proposal Example

Research Proposal: Impact Of Organizational Structure On Corporate Performance Background The firms, which operate in a global arena, have adopted various strategies for the optimization of performance. Based on these various strategies, the organizational structures of the companies differ. Therefore, the question of right organizational structure to optimize corporate performance is important for all small, mid or large firms. The typical questions come in mind primarily deals with whether, organizational structure actually affects the corporate performance of the organization or not. If yes, then to which extent it affects and how does it affect? In order to determine the answers to these questions, there is a need for conducting a research study that may assist the firms to understand the importance of organizational structure. Therefore, this study aims to analyze the relationship between the organizational structure and performance of the organizations.
Research Question
The research question that will be investigated in this research study is as follows:
What are the impacts of organization structure on organizational performance?
Aims and Objectives
The aim of conducting this research study is to identify how an organization may categorize and delegate its task to achieve its specific goals. The major objective of this research is to identify the significant relationship between organizational structure and corporate performance of the firms.
Literature Review
Achieving the desirable level of performance has always been a primary focus in the literature of organizational behavior. Therefore, various researches have been conducted to study the relationship between structure and performance of organizations, and to select the best organizational structure. “The organization’s structure has everything to do with the execution – and ultimate success – of the strategy.”1 Few organizations have adopted the organizational structure claimed to result in highest profits (Weir 24). Arvind and Jeffrey argued in 1988 that high social performance of the companies in different industries was associated with the balanced strength of the three dimensions of public affairs management structure (642). Armour and Teece identified a strong relationship between organizational structure and economic performance of firms. In 1993, Breukel and Simons presented a theory-based model in which they showed that organizational performance is dependent on the fit between the organization structure and Information Technology (Kumar & Palvia 108). Apaydin and Coskun studied the impact organizational institutionalization on the performance of the companies in Turkey and they showed that organizational professionalism, formalization, cultural strength, behavior and performance are the determinants of organizational performance. They also identified the dimensions including balanced scorecard, financial perspective, customer perspective, process perspective and growth perspective to measure the organizational performance. While studying the relationship between organizational structure and performance in Japan in 2003, Lai and Limpaphayom identified that “stock companies that belong to one of six horizontal keiretsu groups have lower expenses and lower levels of free cash flow than independent stock and mutual insurance companies.”2
Various research studies also highlighted that there are direct and indirect factors, which are affected by organizational structure and they affect the organization performance. Vemala Devi in 1994 studied the influence of the organizational structural variables on communication effectiveness of the firms. She identified, “seven independent variables of organizational structure, explained 67.2 percent of the dependent variable of communication effectiveness.”3 The communication effectiveness directly affects the performance of the employees, thereby, increasing the overall organizational performance. Katz and Kahn in 1960 reported that Hierarchical structures improve the coordination (Edge & Remus).
Research Methodology
It will be an exploratory research study. The affects of different kinds of organizational structures such as entrepreneurial structure, functional structure, divisional structure and matrix structure,4 will be determined on corporate performance. Few companies containing different forms of organizational structures will be selected from a specific industry such as cement industry. As most of the information will be collected from publicly available data, therefore, the companies listed on New York Stock Exchange will be selected. The companies will be grouped based on their forms of organization structure. There are different determinants of organization performance; therefore, the variables that will be selected for this research will include financial performance, customer perspective and organizational growth. The data will be collected from published public data, interviews and questionnaires. Financial data of each company will be collected for the last five years. The financial performance indicators (Turnover, profit/sale etc.) of the companies will be compared. The tables and graphical descriptions will be used to derive the results. The two other performance indicators including customers perspective (market shares, communication with customers etc.) and growth (new products, shares of all products etc.) of the organizations will be evaluated through secondary research, published articles etc. The interviews with the management teams of selected companies will be also conducted. Based on data analysis, the results will be concluded.
Expected outcomes and their importance
It is evident from the literature cited, that organizational structure has a strong relationship with corporate performance. However, this research is really important to investigate that which forms of organizational structures may assist the companies to achieve high performance. Moreover, as most of the companies are pursuing international and cross-border strategies, therefore, this research will be really important for the companies to find a best fit between their organization structure and strategies that may assist them to get desirable performance.
Apaydin, Fahri and Ali Coskun. "Organizational Institutionalization And Corporate Performance Results: A Study On Small And Medium Size Enterprises In Turkey." Epoka University . 13 November 2009
Armous, O., Henry and J., David Teece. "Organizational Structure and Economic Performance: a test of the multidivisional hypothesis." Jstor (1978): 106-122 .
Bhambri, Arvind and Sonnenfeld, Jeffrey. "Organizational Structure and Corporate Social Performance: A field Study in Two Contrasting Industries ." Jstor (1988): 642-662.
Cameron, Esther and Mike Green. Making sense of change management: a complete guide to the models, tools & techniques of organizational change. Kogan Page Publishers, 2004.
Devi, Vemala. "Impact Of Organizational Structure On Effective Communication Flow: The Case Of Sharp-Roxy Corporation." May 1994. ePrints . 13 November 2009 .
Edge, G., Alfred and William Remus. "The Impact Of Hierarchical And Egalitarian Organization Structure On Group Decision Making And Attitudes." 1984. SbaWeb. 13 November 2009 .
Kumar, Anil and Palvia, Prashant. "Global Information Technology: Impact on Organizational Technology: Impact on Organnizational Perfromance ." Information Resources Management Association. International Conference, Mehdi Khosrowpour. Idea Group Inc (IGI), 1994. 108.
Lai, Gene C. and Piman Limpaphayom. "Organizational structure and performance: evidence from the nonlife insurance industry in Japan. ." 1 December 2003. Highbeam. 13 November 2009 .
Nanni, J., Alfred and P., Lawrence Carr. "Internal Strategy: Organizational Structure." 28 July 2009. Springerlink . 13 November 2009 .
Weir, Charlie. "Organizational structure and corporate performance: an analysis of medium and large UK firms." Management Decision (1995): 24 - 32.