Organizational Structure and Firm Performance: An Intertemporal Perspective

Since the seminal contributions of Chandler and Williamson, a substantial body of research in industrial organization has examined the performance benefits of the organizational innovation of divisionalization. While existing empirical work has, for the most part, utilized a static framework to analyse the performance effects of divisionalization, adopts a dynamic approach, thereby allowing the intertemporal nature of any such performance benefits to be examined. Presents results from the UK manufacturing industry; the model estimated uses a spline function to incorporate differing organizational regimes over time. The results obtained are less supportive of the benefits of divisionalization than certain of the earlier empirical studies; thus the evidence presented lends no support to the view that organizational change provides unambiguous performance benefits for the firm.