The Impact of Organizational Structure on Mass Customization Capability: A Contingency View

Abstract

This study investigates the role of organizational structure in facilitating the development of mass customization (MC) capability in various manufacturing settings. Specifically, three dimensions of organizational structure are considered—flatness, centralization, and employee multifunctionality. We model organizational structure as a second‐order factor whose value is captured on a mechanistic‐organic continuum, where the organic form is characterized by a flat, decentralized structure with a wide use of multifunctional employees. We propose that a positive relationship exists between the organic organizational structure and MC capability. Additionally, building upon contingency theory, we argue that this positive relationship is moderated by mass customizer type—full mass customizers, which customize products at the design or fabrication stage of the production cycle, versus partial customizers, which customize products only at the assembly or delivery stages. Based on a study of 167 manufacturing plants from three industries and eight countries, we find that, for the overall sample, organic structure plays a significant role in enabling firms to pursue MC capability. However, an analysis of full versus partial mass customizers shows that the positive impact of organic structure on MC capability is statistically significant only for full mass customizers, not for partial mass customizers.