The Effect of Organizational Structure on Corporate Performance
Chapter One
Objectives of the Study
The main objective of the study will be to examine the effect of organizational structure on corporate performance of firms in Nigeria – a case study of Globacom Limited. The specific objectives will be:
- To assess the effect of centralization on the profitability of Globacom Limited.
- To investigate the effect of formalization on the sales growth of Globacom Limited.
- To explore the effect of complexity on the market share of Globacom Limited.
CHAPTER TWO
LITERATURE REVIEW
The literature on organization structure-performance relationships is among the most vexing and ambiguous in the field of management and organizational behavior (Ogosi & Agbaeze, 2018). Hence, evaluations and generalizations concerning the nature and directions of these relationships are tenuous. This underscores the relative lack of generalizability of research in the area and the need for sound study of the structure-performance literature (Dalton, 2013). For decades, it has been argued that an organization’s performance demands that it simultaneously explore and exploit options that highlight the proper structure (O’Reilly & Tushman, 2017). Thus, the fundamental problem confronting organizations is to organize in a way that will ensure its current viability and at the same time, devote energy to create a structure that will ensure future viability by enhancing performance (Blau, 2013). As submitted by Dalton (2013), organizational structure may be considered as the anatomy of the organization, providing a foundation within which the organization functions. Thus, organization structure is believed to affect the behavior of organization’s members.
All organizations have a structure. Lunenberg (2012) suggested that organization structure has two basic functions, each of which is likely to affect individual behavior and organizational performance. First, organizational structures are designed to minimize or at least regulate the influence of individual variations on the organization and the structure set the stage in which power is exercised, decisions are made and the organization’s activities carried out. Van de Ven (2015) highlighted the importance of organizational structure both at the organization and subunit levels for performance. In that light, Blau (2013) opined that not only does structure assist in systematic comparisons of many organizations, it also establish relationship between the characteristics of organizations and stipulate the conditions under which these relations hold, thereby providing the material that needs to be explained by theoretical principles and important guides for driving these principles of the organization.
Behind every great company, division or team is a great organizational structure. The structure of an organization is tailored to its divisions or team’s goals, and one that helps employees understand how they fit into the bigger picture. Without the proper structure in place, an organization may fail to function efficiently, or even collapse (this have been one of the major reasons for most corporate failure). Poor organizational design and structure results in a bewildering morass of contradictions: confusion within roles, a lack of coordination among functions, failure to share ideas, and slow decision-making, brings managers unnecessary complexity, stress and conflict (Ogosi & Agbaeze, 2018).
Centralization is the process by which the activities of an organization, particularly those pertaining to planning and decision-making within an organization are concentrated to a specific leader or location (Lunenberg, 2012). In a centralized organization, the decision-making powers are retained in the head office, and all other offices receive commands from all other offices. The executives and specialists who make critical decisions are based in the head office. Similarly, in a centralized government structure, the decision-making authority is concentrated at the top, and all other lower levels follow the directions coming from the top of the organization structure. According to Zachary (2015), when an organization follows a centralized management structure, it can focus on the fulfillment of its vision with ease. There are clear lines of communication and the senior executives can communicate the vision of the organization to employees. In the absence of a centralized management, there will be inconsistencies in conveying the message to employees because there are no clear lines of authority. Directing the organization’s vision from the top allows for a smooth implementation of its visions and strategies.
Formalization in organizational structure is a process in which managers specify the procedures, rules and responsibilities for the individual employees, departments, groups, teams and the organization as a whole (Warren & Derris, 2015). In a formalized organization, the official organization of a business is typically hierarchical in nature. The formal structure for an organization can generally be found on its organizational chart that usually includes staff names and their official job titles within the organization (Olajide, 2015). A formalized organizational structure focuses on roles and positions rather than the people in the positions. Formalization is enforced to rationalize the decision-making process within an organization (Lunenberg, 2012). Formalization is more like a bureaucratic process, in a way; management set clear, concise rules, which the organization and employees have to respect. A formalized organization is critical for the organization in which issues are known and changes are implemented slowly and purposefully.
CHAPTER THREE
RESEARCH METHODOLOGY
RESEARCH DESIGN
Due to the nature of the study, the survey research design will be considered appropriate to investigate the research questions for the study. The survey research design will be employed to provide a snapshot of how the organization structures its firms can bring about corporate performance.
POPULATION OF THE STUDY
The population of a study as described by Kerlinger (1981) in Ali (1996:104) states “as all members of any well-defined class of people, event or objects and the small group which a researcher purposefully fall out for an investigation is referred to as the sample. While the process of getting a proportion out from the population is the sampling procedure.
Avwokeni (2004:107-111) states that “is the aggregation of element from which the sample is actually selected and the sample size refers to the total subjects chosen from the population for the study”. Based on the above, the study population consisted of all the the staff of Globalcom Nigeria Limited.
Chapter Four
Method of Data Analysis
The study employed the simple percentage model in analyzing and interpreting the responses from the study participants.
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