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How the organizational structure affects innovation in firms?

Innovation makes development and improvement, which is the key to continued success. Organizing is arranging and structuring work to accomplish an organization’s goals. Organization is important for a corporate so as to operate efficiently, but people usually just learn it in theory.

Thus, knowing how to apply organizational structure to innovation in practice is necessary. Besides, although there are many organizational case studies about some situations where innovation may occur, most of these studies are just focusing on the small-scale organizations like particular farms and schools (Sapolsky, 2016).

This article aims at discussing how the organizational structure influence the innovation in terms of firms. This paper will discuss from the perspective of six elements of organizational structure to analyze the effects of each element on innovation and combining them with firm’s operation.

Organizational structure is the formal arrangement of jobs within an organization. There are six key elements of it, work specialization, departmentalization, chain of command, span of control, centralization and formalization. The definition of innovation differs, but it is certain that it is related to new things. What companies come to mind when thinking of successful innovators? Maybe it’s Apple with its iPad, iPhone, iPod, and vast array of computers.

Maybe it’s Google with its continually evolving web platform. Innovation could be stimulated by the application of six elements of organizational structure.

Then let’s talk about the fist element of organizational structure, work specialization. Work specialization is the degree to which tasks in the organization are divided into separate jobs with each step completed by a different person. At this point, innovation could be divided into two parts, administrative and technical innovations.

Specialization have positive effect on both kinds of innovation. Damanpour (1991) used meta-analytic reviews statistic method to analyze the relationship between specialization and two kinds of innovation. Specialization will make workers focus more on one direction and explore more deeply in this direction because their job’s scope is narrower.

They just need to think about their parts, which gives them more energy and time to innovate. Furthermore, specialization will have significant effect on newcomers in technical innovation. Von Krogh, Spaeth and Lakhani (2003, p.1230) state that “specialization in the project incurs benefit for newcomer” by interviewing different groups of wo.....[read full text]

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Here comes to the third part, chain of command. Chain of command is the continuous line of authority that extends from upper levels of an organization to the lowest levels of the organization and clarifies who reports to whom. Chain of command influences the innovation negatively.

If there is a long chain of command, there will be more people involved in decision making, and then there may lead to inefficiency of managerial coordination and lack of flexibility (Vossen, 1998). Ideas of innovation need to be reported to upper levels, so it may have something inaccurate in communication with more people.

Lack of flexibility also leads to lack of motivation to come up with new ideas. Except for this, chain of command may easily lead to bureaucracy. There are three elements about chain of command, authority, responsibility and unity of command. Authority and unity of command would kill the innovative ideas because of bureaucracy.

In order to set up chain of command, span of control is an important aspect to be considered. Span of control is the number of employees who can be effectively and efficiently supervised by a manager. The wider span of control, the more innovative ideas. The increase in span of control may result in the managerial and technical innovation (Williamson, 1967).

If the span of control is wider, the control of individual is less because one manager need to take control of more people. It may facilitate the flexibility and sharing of ideas without too much control. Moreover, the width of span is affected by skills and abilities of manager, employee characteristics and many other factors.

Organization can take advantages of them to stimulate innovation. For example, some employees may be more creative and the manager of them is more likely to listen to others and accept new things. In this situation, they could work together very well and the efficiency of i.....

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However, some researches found that formalization could help the adoption and implementation of innovation. It might be true in some cases, but you could not adopt and implement if you do not have ideas. Initiation is the first step.

In conclusion, the six aspects of organizational structure have different effects on innovation. Work specialization and span of chain have positive impact on innovation while departmentalization, chain of demand, centralization and formalization are negatively related to innovation.

This article discusses the effects almost from the perspective of coming up new ideas in innovation because idea is the first step to innovation. There may be other perspectives of innovation and the effects may be different. What’s more, these effects are considered just in some ways.

Positive does not mean the degree of positive aspects should be very high. It may lead to opposite result when overusing it. Similarly, negative does not mean the degree of negative aspects should be very low. The firms should apply these six elements properly according to the size of firms, the nature of firms and any other external factors.


Word Count: 1505


References

Sapolsky, H. M. (1967). Organizational structure and innovation. The Journal of Business, 40(4), 497-510.

Damanpour, F. (1991). Organizational innovation: A meta-analysis of effects of determinants and moderators. Academy of management journal, 34(3), 555-590.

Von Krogh, G., Spaeth, S. and Lakhani, K.R., 2003. Community, joining, and specialization in open source software innovation: a case study. Research Policy, 32(7), pp.1217-1241.

Vermeulen, P., 2004. Managing product innovation in financial services firms. European Management Journal, 22(1), .....

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