Impact of Organizational Structure on Corporate Performance - Research Proposal Example

The typical questions that come to mind primarily deal with whether the 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 the 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?

Literature Review
Achieving the desired 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.” Few organizations have adopted the organizational structure claimed to result in the highest profits (Weir 24). Arvind and Jeffrey argued in 1988 that the 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 the 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 of 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.”

Various research studies also highlighted that there are direct and indirect factors, which are affected by organizational structure and affect the organization's performance. Vimala Devi in 1994 studied the influence of the organizational structural variables on the communication effectiveness of the firms. She identified, “seven independent variables of organizational structure, explained 67.2 percent of the dependent variable of communication effectiveness.” Communication effectiveness directly affects the performance of the employees, thereby, increasing the overall organizational performance. Katz and Kahn 1960 reported that Hierarchical structures improve coordination (Edge & Remus).

Research Methodology
It will be an exploratory research study. The effects of different kinds of organizational structures such as entrepreneurial structure, functional structure, divisional structure, and matrix structure, will be determined on corporate performance. Few companies containing different forms of organizational structures will be selected from a specific industry such as the 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 organizational 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 the best fit between their organization structure and strategies that may assist them to get desirable performance. Read More