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The impacts of business strategy on organizational structure

The impacts of business strategy on organizational structure PurposeThe purpose of this paper is to test Chandler’s dictum that “unless structure follows strategy, inefficiency results” (Chandler, 1962, p. 314) by assessing the continuing efforts to align structure with strategy in the automobile industry from the turn of the century through the 1980s.Design/methodology/approachThe historical analysis utilized conceptual mediation and moderation methodologies wherein the impacts of strategy on structure were mediated by their impacts on coordination and control, and moderated by external conditions such as uncertainty, variability, interdependence and asset specificity.FindingsThe findings demonstrate that structure followed differing strategies at General Motors, Ford and Chrysler, and provide strong support for Chandler’s dictum. The findings demonstrate the difficulties of maintaining alignment of strategy and structure with changes in the external competitive environment, and the severe consequences of a misalignment of strategy and structure. The findings also demonstrate that structure alone is not sufficient to implement strategy effectively, and that firms must judiciously utilize both internal firm and external market coordinating and control mechanisms to optimize performance.Research limitations/implicationsLimitations include that this is a study of a single industry over an extended, but specific time period.Practical implicationsGeneralization is limited by a study of a single industry, but there are numerous implications for organizational design and strategy implementation that are not industry-specific.Originality/valueChandler’s dictum is often cited, but this is one of very few studies that demonstrate the relationship between specific organizational designs and company strategies, and the consequences of misaligning strategy and structure. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Management History Emerald Publishing

The impacts of business strategy on organizational structure

Marx, Thomas G.
Journal of Management History , Volume 22 (3): 20 – Jun 13, 2016
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References (48)

Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1751-1348
DOI
10.1108/JMH-01-2016-0003
Publisher site
See Article on Publisher Site

Abstract

PurposeThe purpose of this paper is to test Chandler’s dictum that “unless structure follows strategy, inefficiency results” (Chandler, 1962, p. 314) by assessing the continuing efforts to align structure with strategy in the automobile industry from the turn of the century through the 1980s.Design/methodology/approachThe historical analysis utilized conceptual mediation and moderation methodologies wherein the impacts of strategy on structure were mediated by their impacts on coordination and control, and moderated by external conditions such as uncertainty, variability, interdependence and asset specificity.FindingsThe findings demonstrate that structure followed differing strategies at General Motors, Ford and Chrysler, and provide strong support for Chandler’s dictum. The findings demonstrate the difficulties of maintaining alignment of strategy and structure with changes in the external competitive environment, and the severe consequences of a misalignment of strategy and structure. The findings also demonstrate that structure alone is not sufficient to implement strategy effectively, and that firms must judiciously utilize both internal firm and external market coordinating and control mechanisms to optimize performance.Research limitations/implicationsLimitations include that this is a study of a single industry over an extended, but specific time period.Practical implicationsGeneralization is limited by a study of a single industry, but there are numerous implications for organizational design and strategy implementation that are not industry-specific.Originality/valueChandler’s dictum is often cited, but this is one of very few studies that demonstrate the relationship between specific organizational designs and company strategies, and the consequences of misaligning strategy and structure.

Journal

Journal of Management History – Emerald Publishing

Published: Jun 13, 2016

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