The impacts of organizational structure on operational performance through innovation capability: innovative culture as moderator

Abstract

This study aims to test the impact of organizational structure on the innovation capability and operational performance of manufacturing firms considering innovation capability as a moderator. Data were collected through a survey completed by 212 medium and large manufacturers in Malaysia and analysed using the partial least squares technique. Results show that specialization, formalization, informal social relations and link mechanisms have positive significant effects on innovation capability. Furthermore, the relationship between innovation capability and operational performance is supported. Innovation capability also positively moderates the impacts of informal social relations and link mechanisms on firms’ innovation capability. Findings of this study help managers of manufacturing firms to enhance their firms’ innovation capability and operational performance. This study is the first attempt in the organizational structure literature to operationalize innovation capability and operational performance using a multidimensional concept. Furthermore, this study also extends the literature by testing the moderating effect of the innovative culture.