Examining the relationship between organization structure and innovation: A study of Indian corporations

Abstract

This study examined the relationships between innovation in organizations and key organization structure characteristics of vertical and horizontal complexity, formalization, centralization, delegation of authority and participative decision making in the context of Indian industry in the manufacturing and services sector.

Perceived Innovation was taken as a surrogate measure of innovation. Data were collected through a questionnaire survey of perceived innovation, from 198 managers working in 8 Indian corporate sector organizations spread across manufacturing and services. Regression equation, correlation analysis and one way ANOVA test for demographic variables were used to analyze the strength of the relationships.

The results indicated that organization structure impacts innovation. The organization structure dimensions of vertical and horizontal complexity, degree of formalization, delegation of authority and participative decision making, correlate positively with innovation, whereas centralization correlates negatively with innovation.

The findings of the study may be limited by the cross-sectional design and use of self-report questionnaire data. Furthermore, since the study focused on only two sectors of industry there is scope to study the above mentioned relationships in emerging sectors such as pharmaceutical, biotechnology, hospitality etc., and therefore should be interpreted with caution.

The results of this study highlight the possible organization structure requirements for successful innovation in Indian corporations.