Return on Assets Loss from Situational and Contingency Misfits

We develop a rule-based contingency misfit model and related hypotheses to test empirically the Burton and Obel (1998) multicontingency model for strategic organizational design. The model is a set of "if-then" misfit rules, in which misfits lead to a loss in performance; they are complements to the strategy and organizational contingency theory fit rules. Using data from 224 small- and medium-sized Danish firms, misfits are categorized and identified. Then, performance hypotheses are developed and tested using regression models. We confirm the hypotheses that firms with situational misfits or contingency misfits, or both, incur performance losses in return on assets compared with firms with no misfits. Contrary to our hypotheses, we did not find that additional misfits lead to increased performance loss. Our results suggest that just one misfit of any kind may significantly compromise performance. These results yield a deeper understanding of organizational contingency theory, as well as implications for the rule-based fit-misfit organizational design model.

[1]  Christopher Alexander.  Notes on the Synthesis of Form , 1964 .

[2]  Viktor Mikhaĭlovich Glushkov,et al.  An Introduction to Cybernetics , 1957, The Mathematical Gazette.

[3]  Joan C. Woodward.  Industrial Organization: Theory and Practice , 1966 .

[4]  R. Hall,et al.  Organizational Size, Complexity, and Formalization , 1967 .

[5]  James D. Thompson.  Organizations in Action , 1967 .

[6]  P. Lawrence,et al.  Organization and environment , 1967 .

[7]  M. Aiken,et al.  Relationship of centralization to other structural properties. , 1967 .

[8]  C. Perrow.  A FRAMEWORK FOR THE COMPARATIVE ANALYSIS OF ORGANIZATIONS , 1967 .

[9]  P. Blau.  A FORMAL THEORY OF DIFFERENTIATION IN ORGANIZATIONS , 1970 .

[10]  R. Duncan.  Characteristics of Organizational Environments and Perceived Environmental Uncertainty. , 1972 .

[11]  Jay R. Galbraith.  Designing Complex Organizations , 1973 .

[12]  Jay R. Galbraith.  Organization Design: An Information Processing View , 1974 .

[13]  R. Brandis.  The Limits of Organization , 1975 .

[14]  R E Miles,et al.  Organizational strategy, structure, and process. , 1978, Academy of management review. Academy of Management.

[15]  Henry Mintzberg,et al.  The Structuring of Organizations , 1979 .

[16]  M. K. D. Vries,et al.  Top Executive Locus of Control and Its Relationship to Strategy-Making, Structure, and Environment , 1982 .

[17]  L W Fry,et al.  Technology-structure research: three critical issues. , 1982, Academy of Management journal. Academy of Management.

[18]  A. V. D. Ven,et al.  Central perspectives and debates in organization theory. , 1983 .

[19]  John Rohrbaugh,et al.  A Spatial Model of Effectiveness Criteria: Towards a Competing Values Approach to Organizational Analysis , 1983 .

[20]  Arnoldo C. Hax,et al.  Strategic Management: An Integrative Perspective , 1984 .

[21]  A. V. D. Ven,et al.  Alternative forms of fit in contingency theory. , 1985 .

[22]  William H. Glick,et al.  Conceptualizing and Measuring Organizational and Psychological Climate: Pitfalls in Multilevel Research , 1985 .

[23]  M. Porter.  Competitive Advantage: Creating and Sustaining Superior Performance , 1985 .

[24]  Richard L. Daft,et al.  Organizational information requirements, media richness and structural design , 1986 .

[25]  S. Robbins.  Organization Theory: The Structure and Design of Organizations , 1987 .

[26]  David J. Miller,et al.  The structural and environmental correlates of business strategy , 1987 .

[27]  M. D. Wilkinson,et al.  Management science , 1989, British Dental Journal.

[28]  Christopher G. Gresov.  Exploring fit and misfit with multiple contingencies. , 1989 .

[29]  HERBERT A. SIMON,et al.  The Architecture of Complexity , 1991 .

[30]  Raymond F. Zammuto,et al.  Quantitative and qualitative studies of organizational culture , 1991 .

[31]  Stuart A. Kauffman,et al.  The origins of order , 1993 .

[32]  John M. Jermier.  Leadership: A new synthesis , 1991 .

[33]  E. O'Connor,et al.  Gaining Advanced Manufacturing Technologies' Benefits: The Roles of Organization Design and Culture , 1992 .

[34]  R. Hooijberg,et al.  On cultural change: Using the competing values framework to help leaders execute a transformational strategy , 1993 .

[35]  Sue R. Faerman,et al.  Using the competing values framework to facilitate managerial understanding across levels of organizational hierarchy , 1993 .

[36]  A. Tsui,et al.  Configurational Approaches to Organizational Analysis , 1993 .

[37]  William H. Glick,et al.  Fit, Equifinality, and Organizational Effectiveness: A Test of Two Configurational Theories , 1993 .

[38]  J. Crous.  [Organizational climate]. , 1993, Nursing RSA = Verpleging RSA.

[39]  J. L. Naman,et al.  Entrepreneurship and the concept of fit: A model and empirical tests , 1993 .

[40]  Børge Obel,et al.  Validating an expert system that designs organizations , 1994 .

[41]  Børge Obel,et al.  Strategic organizational diagnosis and design : developing theory for application , 1995 .

[42]  Børge Obel,et al.  Organizational consultant: creating a usable theory for organizational design , 1996 .

[43]  Daniel A. Levinthal.  Adaptation on rugged landscapes , 1997 .

[44]  Robert Drazin,et al.  Equifinality: Functional Equivalence in Organization Design , 1997 .

[45]  Kim S. Cameron,et al.  Developing management skills. , 1998, Nursing standard (Royal College of Nursing (Great Britain) : 1987).

[46]  Jeffrey M. Wooldridge,et al.  Introductory Econometrics: A Modern Approach , 1999 .

[47]  A. Lewin,et al.  Prolegomena on Coevolution: a Framework for Research on Strategy and New Organizational Forms , 1999 .

[48]  Jan W. Rivkin.  Imitation of Complex Strategies , 2000 .

[49]  Matthew S. Kraatz,et al.  Modeling the dynamics of strategic fit: a normative approach to strategic change , 2000 .

[50]  L. Donaldson.  The Contingency Theory of Organizations , 2001 .