Influence of Organisational culture on Organisational structure

Abstract

Organizational structure has been one the popular topics of research for sociologists and organization theorists during the last few decades. There are two schools of thought in the literature on organizational structure; one arguing that organizational structures are not influenced by cultural forces, and others arguing that organizational structures are the products of cultural forces operating in the context of an organization. It is in this context, the present study is conducted. The main hypothesis of the study addresses to the following issues: (i) what is the nature of relationship between cultural, contingency and structural variables? And (ii) what is the nature of moderating effect of cultural variables on the relationship between contingency variables and structural variables. This was sought to be accomplished by proposing a set of hypotheses and testing thee empirically. The main hypothesis is that a "rational" relationship between contingency variables and structural variables is likely to be moderated by cultural variables, sometimes resulting in the weakening or reversal of that relationship. In particular, given management's need for control, and the staff‘s need to be dependent in organizational cultures with strong control-dependency norms, any decentralization rationally inferred by contingencies will tend to be weakened, and rule enforcement will tend to be stricter. This study focuses on five distinctive facets of control-dependency norms as the cultural variables moderating the effect of contingency variables on organizational structure. These are dependency, power-orientedness, bureaucratic norms, close supervision, and centralized risk taking. The structural variables included in the study were: decision recommendation level (decentralization), decision approval level (decentralization), authority utilization in new product marketing decisions, authority utilization in new product marketing decisions, authority utilization in production decisions, authority utilization in manufacturing supervision k target setting decisions, existence of personnel rules (formalization), and implementation or enforcement of personnel rules. The contingency variables were: size, age of the organization, technology of the organization, environmental heterogeneity, environmental turbulence, environmental hostility, and rate of organizational change. The study is exploratory in nature. Thirty organizations from the Indian electrical industry provided the necessary setting. The data were collected through questionnaires on cultural, contingency, and structural variables. Appropriate statistical tests were used to analyze the data. The main findings of the study indicate only al tentative support to the hypotheses. Out of a possible number of 210 moderating effects of cultural variables on contingency variables, only 130 (62%) were in the predicted direction. Of the 210, only 35 were significant. Out of these, 27 (77%) were in the direction predicted and eight in the opposite direction. The moderating effect of cultural variables was highest on the structural effects of age of the organization, and was lowest on the structural effects of environmental hostility. The moderating effect of cultural variables was highest on the contextual consequences for authority utilization in technology decisions, followed by formalization of personnel rules. It was lowest on the contextual consequences for authority utilization in manufacturing supervision and target setting decisions, and fairly low on other authority utilization measures. Among the cultural measures, centralized risk taking had the largest moderating effect and the bureaucratic norms the least. Since decentralization and formalization may reflect the administrative philosophy of top management, an attempt was made to examine the moderating effects of these on the relationship between contingency and cultural variables. Among the cultural variables, the moderating effect of structural variables was highest on the bureaucratic norms, while it was lowest on centralized risk taking. For the contingency variables, the moderating effect of structure was maximum on size of the organization. The moderating effect of contingency variables on the relationship between cultural and structural variables was also examined. Based on these findings, some emergent hypotheses were stated. Finally, this study discusses the implications of findings for theory, for practicing managers, for researchers, and suggests some possible areas for future research.