Reviewing, Revisiting, and Renewing the Foundations of Organization Design

Abstract

A long tradition of research has examined the determinants and consequences of organization design. Scholars in this field have mainly been concerned with the extent of empirical variation in organizational structures and the factors driving such variation (Chandler, 1962; Child, 1972; Donaldson, 2001). This stream of research has also charted the role that organization design plays in orchestrating a firm’s overall decision making and in the organizational behavior that follows (Burton & Obel, 1984; Galbraith, 1977; Mintzberg, 1979; Puranam, 2018; Simon, 1947). This extensive body of work draws its explanatory power from a variety of theories: behavioral theory of the firm, structural contingency theory, resource dependence, information processing, social networks, the knowledge-based view, and team theory. At the same time, organization design research is united as regards two key observations namely, that the central problems of design are: (1) how best to divide the organization into subunits and (2) how best to integrate or coordinate those subunits in support of the firm’s overall goals (Lawrence & Lorsch, 1967). This work accordingly acknowledges that there is no single template for “good organization,” much of which depends on the external environment and the firm’s own interdependencies (Thompson, 1967). Although the essence of design’s fundamental problems is still a touchstone in contemporary research, much is changing. Research on organization design has grown in the last decade as academics and managers have become increasingly preoccupied with the relevance of design for organizational strategy,