An Exploratory Examination of Casual Models for Telecommunication Technologies, Organizational Structural Attributes and Organizational Performance in the U.S. Manufacturing Sector

Abstract

In the past decade there have been significant improvements in Telecommunications Technologies (TT). These have had a profound effect on contemporary organizational structures. In attempting to understand this, a few theoretical works have offered a contingent explanation. To extend these research efforts with empirical evidence, our study tested two alternative models to explain the relationship between TT, organization structure, and the organization’s financial performance. Two models tested different scenarios based upon whether structural change leads to more TT use (the organizational imperative view) or vice versa (the technological imperative view. TT penetration, organizational structure (centralization, formalization, complexity, and integration) and organizational performance were examined using a survey of manufacturing organizations. The results of causal modeling show that the relationship between TT and organizational structure is better explained by the technology imperative, which TT leads to change in organizational structure: the more decentralized, more complex and more integrated organizational structures are the consequence of the higher penetration of TT. None of the models supports the notion that improved financial performance is a direct consequence of the link between TT and alternative organization structures. Although recent literature suggest that TT flattens corporate hierarchy, simplifies business structure and processes, and minimizes the use of conventional integrated mechanism, this study found that greater penetration of TT creates a need for more coordination and allows more complex and larger organization structures to evolve.