Organizational Design and Firm Performance

Abstract

This chapter provides a critical survey of the stream of studies that have examined the effect of organizational design decisions on firm performance. The focus is on selected organizational design dimensions that can be measured using quantitative indicators, notably i) organizationalconfiguration, ii) allocation of decision-making authority, and iii) adoption offormal organizational practices. The aim is to highlight ‘stylized facts’ supported by robust quantitative empirical findings, and to link them to insights provided by theoretical work. Moreover, we consider firm-, industry-, and country-specific factors that moderate the organizational design-firm performance relation. In reviewing this emergent and still quite fragmented empirical literature, we also take the opportunity to present open issues, and to indicate avenues for future research.