Individualism, Collectivism and Organizational Structure

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Multidivisional structure is one in which the support functions are independently placed in separate division. Product centric organization is those which are created around product or service. Customer centric organizations are those which are organized around customers. In matrix organization, employees have to report to two separate people who have expert in different fields. And it helps to contain the managers and efficient resource allocation. In Team structure the process is divided among groups. Work team is a stable structure with regard to membership and group provides product and services.

Ambidextrous organization is merging of project teams to achieve particular goal. Network structure is a cluster of task specialized economic entities and relationship is guided by contract or relational norms. Characteristics of organizations are centralization, formalization, specialization, interdependence, integration and modularity. Centralization is the concentration of authority to make decisions resided in upper hierarchy of organization. Formalization relates to adoption of rules and regulation. Specialization requires skills or expertise. Interdependence is degree to which the firm require co-operation among groups. Integration is about the extent to which units are closely matched. Modularity is the degree of hiving off business into manageable units.

Functional structure has high centralization, high formalization, high specialization, low interdependence, low integration and low modularity. Multi divisional structure has moderate levels of centralization, formalization and specialization and low level of interdependence, integration and modularity. Matrix structure has moderate level of centralization, formalization, specialization, integration and modularity. Team structure has low levels in centralization, formalization and specialization and high levels in interdependence, integration and modularity.

Network structure has low levels in centralization, formalization and high levels in specialization, interdependence, integration and modularity.

There are various theories to explain its mechanism and performance relationship.

They are contingency theory, configuration theory, control theory and resource based theory.

Contingency theory: It explains relation between structure and situational factors like environmental instability, technology change and strategy. It emphasizes on both external and internal factors. If there are new product ideas then organization should have more specialized and centralized structure so that information can flow easily[a][b]. This theory is more suitable for condition are stable .It cannot capture multiple goal conditions and it fails to co-relate structure and settings.

Configuration theory: It has been proposed by Meyer and emphasizes on the integration of organization with environment. It identifies strategic type and structural type which gives superior results. It takes into account non-linear relationship between organizational design elements and accept that different configuration may end in similar outcomes. But, this theory does not explain the process or mechanism which defines relationship between structure and performance.

Control theory tries to explain and do away with these deficiencies to large extend.

Control Theory: It attempts to explain the managerial process to achieve goals. The indivisibility of control and consent makes the firm cooperative organization. There are two types of control formal and informal. Informal and formal controls help to achieve the employee’s effort for the organization’s goal. Formal controls are well documented and informal controls are unwritten. Thus, researchers focus on formal. Thus, this organizational theory focuses on how manager can get employee’s effort to achieve organization’s goal. It identifies structure with the environment. And this is an advantage of this theory. But, it does not give specific guidance to managers.

Resource based theory: It proposes that resources that are rare and inimitable can give firm

advantage in competition. Capability is to use such resources to gain competitive advantage.

It fits process to performance.

Under resource based view the structure cannot be considered to be resources, because generally, they can be easily copied and, hence they cannot give competitive advantage. Thus, the resource which are critical for competition are knowledge based and especial talent which are valuable, but not easily imitable and non-substitutable can be considered resources.

Conner et al. have in their thesis had emphasized on the interaction between the various units

for development of competitive advantage. The quality of work gets enhanced through better interaction. They discussed the difficulties in case of contractual relationship and employed based relationship.

In contractual case, the contractor may or may not accept the recommendation of the employer.

They argued that in highly creative atmosphere, knowledge substitution is impossible. So, in most of the cases, knowledge sharing is cost based. The preference of employer to be accepted in case of organization based employee is high.

Thus knowledge substitution and specialization are two economized methods for reduction for cognitive limitation. Structure of organization is guided by the strategy adopted. The cost leadership goes for centralized structure. The differentiator goes for the corporate R&D and corporate marketing attached to CEO office. The Strategic business unit approach is adopted by

Organization which has large number of product offering, market creation as well as profit from operations. It seeks to separate the profit center and achieve efficiency in each segment of products.

Strategic alliance is another approach to get knowledge based advantage. Organizations without boundaries are new concepts coming up. This was first experimented in General electric by the then CEO Jack Welch.

Interrelationship between collectivism and individualism :