The Designing of Organization Structure in Innovative Firms

The Designing of Organization Structure in Innovative Firms

Gökçe Akdemir Ömür (Istanbul University, Turkey)
DOI: 10.4018/978-1-5225-3012-1.ch005

Abstract

Globalization and information technolgy are key factors for altering all dynamics of the business life. These factors push firms to create new tools for struggle with competitive markets. Nowadays, one of the key tools is innovation and to become an innovative firm. The firms focus on differantiation and offering a higher value to their customer. So, they must have suitable numbers of creative employees and infrastructure such as buildings, machines, so on. But, unless these factors integrate each other, it does not create a synergy of them. The structure is like that skeleton for a firm. The structure should coordinate all its factors so that it gets higher effectiveness as a result of the firm's operations. In other words, the firm's aims and strategies determine its structure. For this reason, innovative firms can prefer one or two of their organization structure's types simultaneously such as matrix organization based on projects, ambidexterous structure with its explorary and exploratative sides, or starfish structure with decentralization. In the chapter, innovative firm and its features are described. Then the innovative organization structure is analyzed. Which factors affect the organization structure, what types of innovative structure are, and why the choiced structure type is ideal for innovative operations are explored.
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Background

The undestanding of interaction between organizational chaning and innovation operations is a success key in business life. Firms protect competitive advantages and survivor power by innovation. So firms must organize a design structure for maximizing of innovation operations (Makimattila, Saunila & Salminen, 2014). Designing of organization structure that encourage innovation internalize facilitation innovation management system. The organization structure catalyses the all factors. Therefore, the organization structure and its designing are virtual for success of innovation in the firm. For this reason, many researchers in the related literature study how designing of an organization structure for maximizing firm's innovative potantional and which factors affect to innovation activity. According to H. Mintzberg (1983), an innovative organization structure that enable a high level of contrubition to innovation operations and effective knowledge management must design flexiable. In this sense, he mentioned that adhocracy is the most sutiable organization structure for innovative operations. Selwyn W. Becker and Thomas L. Whisler (1967) mentioned that the structure that promotes innovation is based in different tasks. William M. Evan and Guy Black (1967) said that the designing of organization structure must be constructed according to differentiated tasks and a level of individual and functional specialization. Fariborz Damanpour (1991) mentioned interaction between organizational culture, management support and structure. Fariborz Damanpour and Shanthi Gopalakrishnan (1998) pointed out to the existence of the structural factors that affect innovation success such as specialization, functional differantation, centralization and vertical differentiation.

The structure allows to work together all factors harmoniously. So, first of all, the structure must be designed to allow a division of labor in diffirent tasks and their coordination (Mintzberg, 1983). The innovative organization structure is studied according to firm size, formalization level, degree of decentralized or autonomy, individual and functional specialization in the literature (Evan & Black, 1967). The structure enables for using of process and resources at the optimal level. Besides the organization structure must has a design compatible with organizational culture. Innovation is not only to protect existing products, process but also to create new and different things. So management support is needed to occur organizational changing. It is related with organizational culture and climate.

A firm should be should be ready for change and to have high level of adoptive skills to alteration at its environment. Thus, there is an organization climate that is based on decentralization at the making decisions process. The designing of organization structure enable to collect knowledge at the same portal and create new ideas. The designing of an organization structure must ensure an effective division of labor and coordination among different tasks between firm's functions and project teams at innovative firms.

Innovation isn’t limited to assign to a specific a person, team or authorised as a responsible; the designing of organization structure enables the staffs to contribute innovation at the firm. It hasn’t been analysed enough how innovative organization structure is designed in the related literature. However, becoming an innovative firm is important to survive in globaled world. So many researches and managers focus further techniquies that promote innovation management systems and to increase their outputs. But the techniquies and their outputs are just a part of a innovation management process occurring in an innovative firm.

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