Zachary B. Awino

(University of Nairobi, Kenya)

 

 

Abstract: The paper gives an overview of a conceptual theme first coined by Alfred Chandler (1962), who developed a framework of structure-strategy and performance linkage. He argued in his thesis that structure follows strategy to enhance performance. He strongly believed that a strategy is the long-term plan that an organization should develop, but for its success there has to be an organizational structure in place to provide an avenue for its implementation and enhance performance. The paper has followed a more or less similar pattern within the large manufacturing firms in Kenya — but has only used organizational structure as an independent variable and performance as dependent variable. Strategy has been omitted and not aligned to structure instead structure has been aligned to performance. Since this area provides a knowledge gap this study intends to fulfil. A null conceptual hypothesis for the study has been developed which avers that organizational structure does not positively influence performance of large manufacturing firms. The study used a cross-sectional survey where data was collected from 102 large manufacturing firms. The chief executive officers of these firms were interviewed together with the middle-level and top managers. Regression analysis was used to test the hypothesis — it emerged that organizational structure on its own using Return on Assets (ROA) does not influence performance. However a further test using non-financial measures such as internal processes, customer perspective and performance produced a different result which influenced performance of large manufacturing firms. The findings of this study agreed with other previous studies and opens an avenue for further research. It has got an implication in organizations whose performance should not only be viewed using one construct of financial indicators and that non-financial measures may also be considered in the organizational performance — but overall there is clear indication that structure influences performance — even without putting in place the strategy for the organization.

 

 

Key words: performance; large; manufacturing; firms; empirical

 

JEL codes: L1, M1