Business Organizational Structure in the Context of Economic Transformation: The Case of the Czech Republic

Business Organizational Structure in the Context of Economic Transformation: The Case of the Czech Republic

Pavlína Křibíková (VŠB – Technical University of Ostrava, Czech Republic), Michaela Tichá (VŠB – Technical University of Ostrava, Czech Republic) and Blanka Poczatková (VŠB – Technical University of Ostrava, Czech Republic)
Copyright: © 2018 |Pages: 20
DOI: 10.4018/978-1-5225-3856-1.ch006
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Abstract

After the communist regime collapse in 1989, economy of previous socialistic countries of Central and Eastern Europe was to be transformed. Economic system of Czechoslovakia was changing within 1990s as well, from centrally managed to market oriented system. The change of ownerships and needed restructuring is closely connected with the change of organizational structure of companies, which was changing very slowly within 1990s. The aim of this chapter is to explain the changes of business organizational structure, which follow the economic companies restructuring provided within 1990s. Czech companies went through big change as for ownership structure within 1990s, which was connected with total restructuring. Original managerial structures were not suitable and were too tied with previous style of ineffective management. Now the role of manager moves to the role of businessman and performance monitoring moves to an architect being responsible for design and organizing.
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Background

According to popular theoretical approaches, the organization is one of the basic managerial functions. In the frame of organizational development, it is necessary to determine the status of organizational structure, which is not developing alone but it is impacted by the same factors as organizational development. Organizational structure created in accordance with company´s internal and external conditions as well as other elements of organizational design and can be a significant advantage, can significantly influence the company performance. The question whether it is possible to influence the company performance by the organizational structure selection has been dealt with by many authors.

Hierarchic structures are being understood as classic organizational structures. Linear, functional, division, matrix organizational structures (last two can be considered as structures with flexible elements and higher decentralization) are meant. Those structures are based on the principle of one responsible manager and a vertical line of superiority and subordination. Even these classic structures are forming under impact of environmental and organizational changes; they are still used and prevail in the practice. Even in current fast changing conditions and strong competitive pressure the classic organizational structures are not enabling for fast reaction to the conditions change, they belong to the most often used in the Czech companies.

Organic structures mainly based on horizontal communication, low level of formalization, information share and decentralized decision-making (flexible organizational structures). Procedural organizational structures, fractal, virtual and general net forms are meant.

Original organizational theories are based on the classic text of Weber, who perceived the bureaucratic organization as the best one due to its clear division of activities, roles determination and hierarchic arrangement of authority. By Weber (Weber, 1997), this formal structure enables bigger accuracy, speed, knowledge and continuity when fulfilling the tasks and, at the same time, it lowers pressure and ambiguities. Barns and Stalker (1961) pointed out relation between the formal structure and organizational performance proved that companies with organic structure or freely tied net of workers are better adapted to dynamic environment. According to those authors, the organization with Weber´s mechanical structure, in which the work is divided among specialized positions within clearly defined hierarchy, is more suitable for static environment.

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