The Relationship between Organizational Structures and Performance: The Case of the Fortune 500

Abstract

This paper investigates the relationship between organizational structures and the performance of FORTUNE 500 companies, which have always been among the most profitable and admired in the world. After a discussion of whether companies should organize regionally, nationally, or globally, the important assumption is made that each structural type utilizes resources differently in generating profit. Performance is conceptualized as Return on Capital Employed (RoCE) and Return per Employee (RpE). A sample of 50 companies was randomly selected. Testing revealed that structural types are positively related to financial performance, calculated as RoCE, with Multidivisional-structured companies outperforming Functional-structured ones; structural types are not related to human resource performance, calculated as RpE.

Citation

Avdelidou-Fischer, N. (2006), "The Relationship between Organizational Structures and Performance: The Case of the Fortune 500", Choi, J.J. and Click, R.W. (Ed.) Value Creation in Multinational Enterprise (International Finance Review, Vol. 7), Emerald Group Publishing Limited, Leeds, pp. 169-206. https://doi.org/10.1016/S1569-3767(06)07008-7