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Structuring organizations across industries in India

Article in Management Research News · September 2009

DOI: 10.1108/01409170910994169

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Structuring organizations across Structuring

organizations
industries in India across industries
Sanjay Kumar Singh
Institute of Management Technology, Ghaziabad, India
Abstract
953
Purpose – The purpose of this paper is to investigate structural patterns across industries in India.
Organizational design is posited as a form of competitive advantage, which also helps Indian
organizations build excellence.
Design/methodology/approach – The study used a questionnaire to investigate the structural
patterns of organization in 32 enterprises in India. The sample consisted of 1,532 participants across
six industries. The data were analyzed using SPSS v.15.0.
Findings – The findings suggest that the outward picture of structural patterns remains the same
across industries but significant difference emerge in the inner core of the structural architecture of
Indian organizations. For example, the inner core of the banking industry was found to be different
from the other five industries studied.
Practical implications – The findings suggest that the links between organizational structure and
national culture should be harmonious. Simultaneously, the structure of the organizations should be
aligned with both the task and general environment of the business.
Originality/value – There is a scarcity of research into this domain of knowledge in India and the
paper provides additional insights into the organizational structures of Indian enterprises across the
major industrial sectors.
Keywords Organizational structures, Business environment, India, National cultures
Paper type Research paper

Introduction
India and China are considered the emerging economies of the world. The opening up of
these economies led to significant foreign direct investment (FDI) and both domestic and
international players have established new business enterprises. Such new ventures need
viable structural architectures to withstand the dynamic business environments of an
emerging economy. In addition, managing the diverse workforces that characterize
organizations in emerging economies requires a robust and viable structural architecture.
Because management practitioners and scholars in the field view the organizational
structure as primary driver of change, the skeletal structure of an organization
influences its decision-making and internal processes (Wang and Ahmed, 2003).
The structure of any organization consists of not only its hard components (people,
groups and departments) but also the softer relational aspects of the organization
(Bunge, 1985). Furthermore, according to this structure is fundamental in determining
the composition of these relations and capturing the essence of the activities of an
organization. The organizational structure is the sum total of the ways in which labor
is divided into distinct tasks and how its coordination among these tasks is achieved
(Mintzberg, 1983).
While the debate about ideal organizational structures in ongoing, consensus has
eluded both management practitioners and scholars. For example, an organization that
operates in two distinct environments can never achieve structural ambience because
of different social, political and economic conditions operating in each of its Management Research News
Vol. 32 No. 10, 2009
environments. This line of thinking aligns with the views of scholars who note a pp. 953-969
paradigm shift in organizational analysis. Organizations are no longer viewed using # Emerald Group Publishing Limited
0140-9174
the machine metaphor; rather, a contingency approach has replaced the mechanical DOI 10.1108/01409170910994169
MRN viewpoint (see Burns and Stalker, 1961; Lawrence and Lorsch, 1967; Morgan, 1997).
32,10 Furthermore, in a knowledge economy, organizations need to be flexible, agile and
adaptable to maximize opportunities existing in a knowledge-rich environment. The
traditional way of conceptualizing organizational structure was found lacking in the
face of new challenges and demands (Wang and Ahmed, 2003).
Today, the need for organizations to create structures, which complement rather
954 than oppose technology, innovation, national culture, the operating environment,
strategic directions, organizational life cycles and diversity is paramount. Therefore, if
the organizational structure is to align with the above elements, managers will need to
adopt a process of continuous renewal because these contingent variables are not
static. This dynamism creates a situation whereby leading managers must spend both
intellectual and financial resources to keep the organization running at a satisfactory
speed. Cutting-edge organizations of this type are warranted in India and cross-sector
research will help paint a complete picture of the organizational structures in place in
Indian companies as they strive to improve.
Little research concerning organizational excellence in the Indian context can be
found in the literature at present. Therefore, this study seeks to provide managers and
scholars with knowledge about what works when Indian managers design
organizations for competitive advantage. This study unravels the essential elements of
the structural architecture of organizations in several Indian industrial sectors for the
benefit of established as well as new enterprises.

Organizational structures
Structure involves an organization’s internal pattern of relationships, authority and
communication (Thompson, 1967). The structure of an organization has two critical
components – formal lines of authority and communication including the information
and data that flow along those lines (Chandler, 1962). Given this, the organizational
structure of an enterprise ‘‘influences the flow of information and the context and nature
of human interactions’’ (Miller, 1987). Organizational structures influence collaboration
internally and collaboration with external stakeholders. In addition, the structure
influences the methods of coordination, the allocation of power and responsibility and
levels of formality and complexity (Bower, 1970). For example, Stank et al. (1994) found
that while centralized and decentralized enterprises exhibited similar capabilities in the
domain of effectiveness (that is, reaching their goals), centralized firms appeared to be
more efficient (that is, they used their resources efficiently). In either case, the
organizational structure is believed to affect performance.
A cursory review of the literature concerned with conceptualizing organizational
structure suggests that the construct has been revisited constantly with economic
development. The classical approach perceives organizations as ‘‘machines’’, leading to
emphasizing scientific methods to separate work processes and closely monitoring the
performance of workers (Fayol, 1949; Taylor, 1911). This school of thought treated
enterprises as closed units impervious to the external environment. Traditionalists
downplayed environmental changes. In contrast, contingency theorists posited that
‘‘there is no one best way to organize’’ and ‘‘any ways of organizing are not equally
effective’’ (Galbraith, 1973). In other words, the contingency theorists advocated that
appropriate organizational structures depend on certain environmental factors,
including the stability and the complexity of the environment (Burns and Stalker, 1961)
as well as the size, age and system of technology (Mintzberg, 1989).
 While organizations generally have an operating core, a strategic apex, a techno- Structuring
structure and a division of labor, these elements are coordinated to accomplish the
mission of the organization. To achieve their mission, organizations require
organizations
coordinating mechanisms, which normally include direct supervision, standardized across industries
work processes, defined outputs and requisite skills as well as a process of mutual
adjustment (Mintzberg, 1980). In achieving productivity, the organization of work is a
vital factor. To this end, organizational structures provide both the task and authority
relationships that predetermine the way in which employees perform their work 955
(Hunter, 2002). Drucker (1999) also acknowledges that there is no correct way to
structure an organization. There are only organizations that have distinct strengths,
limitations and applications. Any given organizational structure needs to align its
tasks and conditions to match its environment (Drucker, 1999).
Hunter (2002) identifies ten generic organizational structures from the literature (see
Ghoshal and Bratlett, 1995; Mintzberg, 1989; Wheatley, 1992). These are identified as
the entrepreneurial, missionary, functional, divisional, matrix, process, cellular,
quantum, professional and political structures. In this context, managers can even
choose multiple organizational structures to suit the stability or complexity of their
business environment. Organizations across the globe aim to be aligned for the most
part with the external environment and as a consequence of multiple external
environments, no universal organizational structure exists.
The literature on organizational structure tends to focus on after-the-fact cases,
developing theories based on descriptive analyses. Theorists look for critical factors in
successful organizations and generalize their findings to produce an ideal structure
and/or a formula for success (Peters and Waterman, 1982). Unfortunately, what works
for one organization may not work for another, even if only slight differences exist
between the circumstances of both organizations (Martinsons and Martinsons, 1994),
which reinforces the contingency view on organizational structure. However,
Martinsons and Martinsons (1994) point to three generic models of organizational
structure in industrial contexts, namely, the functional, divisional and matrix
structures. Each has their own merits and limitations.

The functional structure

The functional structure has a direct lineage to the bureaucratic structure, with its
effectiveness based on a clear division of labor. Martinsons and Martinsons (1994) also
indicate that smaller-to-medium sized organizations with a limited product range lean
toward a functional structure. However, in this structure, individuals become insulated
within functional groups and fail to understand or appreciate the functions of others.
Coordination problems often arise in organizations that rely primarily on a functional
structure. With its traditional chain of command mentality, a functional structure itself
becomes a barrier to cross-function communication and the coordination required to
implement effectively multiple products and multiple market strategies (Wilson, 1986).

The divisional structure

This structure is generally used when organizations become larger and begin to
diversify their product lines. In this case, the organization is divided into separate
units, based on different products or markets. In other words, the company breaks up
its operation into manageable-sized units (Pascale, 1990), which operates under a
mechanistic structure. The units may share some corporate resources (for example,
research and development) but overall, they are relatively autonomous and free to
MRN realize corporate-level objectives of their own choosing. As a result, this structure is
more flexible and adaptable to market conditions compared to the functional structure
32,10 (Martinsons and Martinsons, 1994). Nevertheless, it is difficult to generate an overall
corporate identity, as each unit remains preoccupied with creating and maintaining its
own image. In turn, this gives birth to the problem of coordinating the different units.

The matrix structure

956 Used to bridge the gap between functional and divisional structures, the matrix
structure emerged as the organization structure of the 1970s (Miller, 1986). It is based
on the concept of dual command, where each employee in the matrix is responsible to
one functional department and one project manager. One problem with the matrix
structure is that of ambiguity as relationship between the functional and project
aspects of the enterprise is not clearly specified by the rules and procedures of the
organization. This has the potential to create a power struggle and blur the lines of
responsibility and accountability. As a result, many organizations quickly realized that
the matrix structure is more burdensome than helpful (Peters, 1979).
The literature also depicts other structural forms that allow organizations to realize
their corporate goals. Two particular forms, the modular and hybrid structures,
warrant closer attention because each has received acceptance under certain
circumstances by scholars and management practitioners.

The modular structure

This structure extends the concept of horizontal coordination and collaboration beyond
the boundaries of the traditional organization. As a result, organizations can subcontract
many of their major processes to other companies and coordinate their activities from a
small headquarter-type organization (Daft, 2004). With such a structure, the hub
maintains control over processes in which it has either world-class products or difficult-to-
imitate capabilities and then transfers other activities – along with the decision-making
and control over these activities – to other organizations. These partner organizations
organize and accomplish their work using their own ideas, assets and tools (Engle, 2002).
The idea is that an organization can concentrate its distinctive competencies in specific
areas, enabling the organization to do more with less (Tapscott, 2001).

Hybrid organizational structure

The hybrid approach was developed by combining the characteristics of the functional,
divisional, geographic or modular structures to match the specific strategic needs of
the organizations. As this form of organizational structure offers greater flexibility, it is
well suited to rapidly changing business environments (Daft, 2004). The Sun Petroleum
Products is an example of an organization that has extensively used the modular kind
of organizational structure and have benefited significantly by its adoption
(Ackerman, 1982).

Structuring organizations for a competitive edge

Certain organizational structures undoubtedly are more conducive to realizing
corporate goals and strategies. However, because of the complexity of the situation of
many organizations, a single ideal structure is difficult to identify (CIC, 2003;
Martinsons and Martinsons, 1994). Martin-de-Castro et al. (2006) observed that the
organizational structure is a necessary capability for any organization and although it
is difficult to imitate or transfer, it is susceptible to substitution. Therefore, it can be a
source of competitive parity. The formal structures of an organization and its external Structuring
links play important roles in innovation management (Teece, 1996). Furthermore, in a organizations
dynamic hyper-competitive environment, the life expectancy of a competitive
advantage, based on a particular kind of organizational structure, is bound to be short- across industries
lived (Martin-de-Castro et al., 2006). In this sense, the research findings of Lawrence
and Lorsch (1967) concerning the need for organizational structures to be designed
with the external environment in mind remain valid today. 957
In an era where managing organizational knowledge is seen as competitive
advantage, the organizational structure can place limits on an organization’s capacity
to read its environment and learn (Miles and Snow, 1978). This again reinforces the
need for structuring an organization with due attention to the external environment.
Drucker’s (1992) view about modern organizations having structures to pursue
innovation, capture, and apply knowledge requires high degrees of decentralization for
expedient decision-making. In a similar vein, to cope effectively with the demands of
the fast changing knowledge economy, the N-form Corporation (Hedlund, 1994), the
federated structure (Handy, 1992, 1994), the hypertext structure (Nonaka and Takeuchi,
1995), the middle-up-down management system (Nonaka, 1988) and the J-form
organization (Lam, 2000) have all been identified and described. These different forms
of organizational design support the contingency theory, which advocates that there is
no best way to structure an organization – organizational situations dictate what kind
of structuring is required within a particular time horizon.
Research on organizations has explored the relationships of organizational
structure vis-à-vis creativity, innovation and productivity. A common finding among
this research is that certain kinds of organizational structures have positive influences
on an organization’s competitive edge. Participative structures, for example, influence
positively the innovative behaviors of people (Khandwalla, 1995; Lowe, 1995). This
occurs because participation in decision-making leads to greater commitment among
workers, more organizational involvement and higher levels of internal integration
within an organization (Shadur et al., 1999; Strauss et al., 1998). In a similar manner,
empowering people, especially those at the lower rungs of the organization, influences
innovative behaviors at the workplace (Samaratunge, 2003). Empowering people is a
great motivator. Shavinina (2003) observed empowered multi-functional teams that
were more successful at innovation than their underpowered counterparts were.
Positive on-the-job behavior and the organizational structure go hand-in-hand. People
have a greater capacity to engage in productive behaviors like innovation and
opportunities to participate fully in organizational life. Feeling empowered increases
the chance that people will make more informed and effective business decisions.
Other forms of organizational structuring influences positively job behaviors
necessary for organizational excellence. Rapid decision-making at every level requires
a decentralized organizational structure. The decentralized structure has a positive
motivational effect over employees according to Khandwalla (1995). Nevertheless, West
(2000) cautions that a decentralized structure can be a negative predictor of
organizational innovation. While research suggests that formalization has been viewed
negatively in the context of gaining a competitive edge for an organization, others
believe highly formalized organizational structures promote innovative job behaviors.
Formalization assists in creating discipline in work processes and the behaviors of
employees, which is fundamental for any collective creative processes (Fairtlough,
1994) and the implementation of creative ideas (Weick, 1998). It is also important for
MRN increasing the accountability of decision-makers towards each other and towards the
32,10 entire organization (Wijnberg et al., 2002).
While organizational structures have the potential to deliver a competitive
advantage for many enterprises, it is important to know precisely what form an
organizational structure should take to be in consonance with both its internal and
external environment. The literature above attests to this contentious issue. The
desired outcomes of any organization can be achieved through the right combinations
958 of the accepted elements of an organizational structure. The diverse and sometimes
contradicting research literature has created a kind of curiosity in the mind of many
scholars and practitioners about what kind of organizational structures suit Indian
enterprises, which now have to compete on a global playing field.
The study below has been designed to address three main research questions in the
context of Indian enterprises:
RQ1. What is the profile of organizational structures of firms across industries,
which provide these organizations with the capabilities to compete
effectively in a global economy?
RQ2. Are there significant differences in the structural form of organizations
belonging to different industry segments?
RQ3. Is there is an industry-specific structural framework to deliver competitive
advantages for organizations operating in a fast changing global economy?

Method
The study adopted a quantitative research methodology to determine the structural
fabric of organizations across industries in India. It sought to reveal and understand
the organizational structuring of Indian organizations vis-à-vis the characteristics of
the external environment.

Respondents of the study

The study, in the English language, was conducted in 32 organizations, which
belonged to six industry segments of the Indian economy. For some decades, these
industry segments have been considered as the mainstay of the Indian economy. The
six industries are Banking, Information Technology and Information Technology
enabled Services (IT/ITeS), Hospitals, Automobiles, Telecom and Retail. The total
number of respondents in the study was 1,523 from middle-management positions in
the 32 organizations, which operate in Indian territories and abroad. The sample was
not random; only participants who volunteered to take part in the study were surveyed.
The sample can be considered as pan-Indian in nature. Different geographical
segments as well as diverse cultural background are represented. The sample
consisted of 58 per cent male and 42 per cent female middle managers. Concerning
educational attainments, 38.29 per cent were engineering/technology graduates and
remaining 61.71 per cent were postgraduates in the field of management in either
engineering or technology fields. The average work experience of the sample was
around 14 years – their average age was almost 40 years.

Description about industries

Thirty-two organizations from six industries were selected to investigate structuring
patterns in companies for global competitive advantage. This section describes briefly
the organizations and industries represented in the study.
Banking Structuring
The study sampled 387 managers from the banking industry. An emerging economy,
ongoing reforms of the financial sector, ever-increasing levels of FDI, a positive
organizations
regulatory climate and a diverse demographic profile have led India to emerge as one across industries
of the fastest growing banking markets worldwide. Compared to global banking
operations, Indian banks have done exceptionally well with the price-to-book value
being second only to China (Boston Consultancy Group). In this study, participants
came from the State Bank of India, Punjab National Bank, HSBC, Standard Chartered, 959
HDFC and ICICI.

IT and ITeS
These sectors have significantly influenced the Indian economy for at least the
past decade. Deloitte (2008), who carried out a study for NASSCOM, found that the IT/
ITeS contribution to country’s GDP has risen steadily, increasing from a share of only
1.2 per cent in 1998 to 5.2 per cent in 2007. It has contributed to India’s foreign
exchange reserves by increasing exports by almost 36 per cent and direct employment
in the industry has grown at a compound annual growth rate of 26 per cent in the last
decade, making it the largest employer in the organized private sector in the country.
The organizations surveyed produced 398 responses from major IT and ITES
organizations including Tata Consultancy Services, Tech Mahindra, Infosys, Samsung,
Fluor, I Flex, Parametric, Syntel, IBM, Computer Science Corporation, Electronic Data
Systems, LG Electronics, Videocon India and Engineers India Limited.

Hospitals
India as a nation has low spending on health care and a limited availability of hospitals.
Nevertheless, the future holds bright for this sector because it is projected to grow to
nearly US$40 billion by 2012 (PricewaterhouseCoopers, 2007). The present study
sampled 145 medical professionals working for the following health care organizations
in India: the Apollo Hospital, the Escort Heart Institute and the Fortis Hospital. These
organizations have successfully provided specialized health care services for decades,
catering to a growing demand in high-quality services such as cardiology, nephrology
and geriatrics.

Automobiles
This sector too has grown at a good speed with the size of the Indian automotive
industry now estimated to reach between US$120.09 billion and US$155.12 billion by
2016. Industry experts peg the growth rate of Indian automobile sales at a compounded
annual growth rate of 9.5 per cent. There has been a significant increase in overall
sales; it is 13.5 per cent higher for the fiscal year 2006-2007 compared with the previous
fiscal year. In this study, 184 respondents came from the following firms: Maruti
Udyog, Honda Motors and Yamaha.

Telecom
The Indian telecom industry has progressed through many phases of growth and
diversification. In order to achieve the country’s social and economic goals, the
Government of India in 1999 authored the forward-looking National Telecom Policy
1999. An outcome of the NTP was tremendous growth in the sector among the major
players such as BSNL, MTNL, VSNL in the fixed line market and Airtel, Vodafone,
Idea, Tata and Reliance in the mobile segment. The practicing of new tariffs and
MRN discount schemes has delivered competitive advantage in this sector. In this study, 212
32,10 respondents came from middle-level management in Reliance Infocom, Vodafone and
Airtel.

Retail
Retailing is India’s fastest growing industry, accounting for over 10 per cent of the
960 nation’s GDP. The share of retail industry in India is such that it contributes to
approximately 8 per cent of total employment. It requires an initial heavy investment
and break-even is difficult to achieve in a short span of time. Experts believe that the
retail sector is the next boom industry in India. The organizations included in this are
Westside, the Shopper Stop and the Pantaloons. A sample of 197 middle managers
participated in this study.

Psychometric measures
The development of the instrument used followed standard practices of test
construction. Using literature in the field combined with the opinions of 30 industry
experts, the major elements of an organizational structure were identified and
subsequently, the writing of items for each of the elements of the structure was
completed. There were 28 statements to be rated by the respondents using a five-point
Likert scale. A pilot questionnaire was administered initially to a sample of 106 to
identify the discriminating index of the statements. The item analysis, using the
Student’s t-test, suggested that eight out of 24 statements failed to discriminate
statistically, and as a result only 20 statements were included in the present study.
These 20 statements were also found to possess face as well as content validity
using the expert judgment method. To know the parameters as well as reliability
coefficients, the statistics of factor analysis and Cronbach alpha were performed (see
Table I). It was concluded that these statements about organizational structure had
seven dimensions and the individual dimensions as well as instrument as a whole have
moderately high reliability coefficients. The statistics used to analyze the data
generated by the survey included descriptive statistics, the Student’s t-test, the analysis
of variance (one way), factor analysis and Cronbach’s alpha.

Results
The literature generally concludes that the productivity and competitiveness of
organizations largely depends upon how they are structured. The results in Table I
depict the outputs of factor analysis in terms of the number of factors extracted, their
eigenvalue individually and the percentage of explained variance for individual factor

% of variance Total explained Cronbach alpha

Factors Eigenvalue explained variance coefficient
Table I.
Outputs of factor 1 7.291 21.56 0.748
analysis; number of 2 5.432 17.52 0.694
factors, eigenvalue, 3 4.852 12.26 0.681
percentage of explained 4 3.988 10.54 85.36 0.719
variance for individual 5 3.213 8.89 0.689
factor and Cronbach 6 2.846 7.62 0.678
alpha coefficients 7 2.014 6.97 0.698
as well as for the total scale of organizational structure and the Cronbach alpha Structuring
coefficients for the factors, which were extracted.
The principal component method with varimax rotation was used to factor analyze
organizations
the 20 statements of the organizational structure questionnaire (OSQ). Furthermore, it across industries
was also decided to have a eigenvalue of 1 for the extraction of these factors. The
results as depicted in Table I indicate that the OSQ has seven parameters/dimensions –
the minimum as well as the maximum eigenvalues for these seven factors were found
to range from 7.291 and 2.014, respectively.
961
The seven factors of the OSQ (see Table I) indicate that the OSQ in its present form
measures 85.36 per cent of the structural fabric of companies across the industrial
sectors in India. Therefore, the OSQ is a good measure of organizational structure and
the results are reliable. Table I also indicates that factors 1, 2 and 3 together are very
important in understanding the structural fabric of Indian companies as together they
explain almost two-thirds of the way organizations in India have structured themselves
for competitive advantage. Hence, the first three factors/dimensions of the OSQ should
be given prime importance when structuring Indian organizations for excellence.
Table I also depicts the internal consistency reliability coefficients for the individual
factor/dimension of the OSQ. It is mentioned that the reliability coefficients indicate
statistically how reliable the data obtained is for organizations. The obtained reliability
coefficients, which range from 0.678 to 0.748, indicate that the items belonging to the
dimensions of OSQ are reliable to a moderately higher extent. Furthermore, the
findings derived from the OSQ have utility for the Indian organizations in this study.
Table II is an elaboration of the data presented in Table I and succinctly depicts the
number of statements belonging to each of the seven dimensions of the OSQ, the factor
loading for every individual item in the questionnaire and the naming of the extracted
factors. From Table II, the factor loading of 0.471 was taken as a cut-off point for
identifying individual items belonging to any of the seven dimensions. Furthermore, the
20 statements of the OSQ have factor loadings ranging from 0.471 to 0.821. All of the items
of the OSQ are uniformly distributed across the seven factors, except for factors 6 and 7,
which have two items each. Finally, all the seven factors were named using generally
accepted methods of reading all statements belonging to a particular factor, and whatever
theme emerges this will be the name of that factor. Hence, factors 1 to 7 have been named
as vertical linkage, horizontal linkage, functional structure, matrix structure, hybrid
structure, modular structure and divisional structure. Since the first three factors explain
two-thirds of structural patterns in organizations across industries in India, companies
seem to have high preferences for functional structures with vertical and horizontal
linkages to effectively deal with challenges and problems that arise in their businesses.
One of the research questions concerned whether significant differences exist in
organizational structures across industries. To this end, one-way analysis of variance
(ANOVA) was performed on to the data collected and the findings obtained are
depicted in Table III. The results indicate that there are significant differences in
organizational structuring across Indian industries. In other words, each industry
segment has a different kind of structural pattern in the light of external competitions
and the business environment. Therefore, no one form of organizational structure is
dominant across industries in India as is the case with organizations operating in other
parts of the world.
Figure 1 depicts the relative preferences of structural patterns across the different
industries in India. Vertical integration, the modular and the divisional form of
structuring are mostly in use in these industries. At the same time, these three major
MRN Factor Naming
32,10 Factor Measurement items loading of factors

1. People know to whom they report and whom they Vertical linkage
manage/command 0.599
Vertical information systems, such as periodic reports/
written information or computer-based communication
962 are in place and practiced in this organization 0.688
Every department/division has a standing plan for its
members to efficiently perform activities within their
respective area of resource allocation 0.538
Whenever employees confront with repetitious problems to
solve and decisions to make, they are provided with a set of
rules and procedures as general guidelines to follow 0.504
2. The Product Manager has the authority to hire/fire/give a Horizontal linkage
raise in salary to the team members 0.501
My organization believes in having a full-time integrator
with a title such as Product Manager/Project Manager/
Program Manager to coordinate sales, distribution and
similar activities 0.743
Whenever a problem arises and employees do not know
how to solve it, the organization’s policy is to refer it up to
the next level in the hierarchy for an answer 0.821
3. The prime authority over team members (Task Forces or Functional structure
Teams) regarding giving a pay raise, hiring or firing lies
with the functional managers only 0.777
In this organization, the managers/employees do not have
all operations under their jurisdiction and as a result,
they rely on contracts, coordination and negotiation with
partners to hold things together 0.722
4. In my organization, a permanent cross-functional Task Matrix structure
Force/Team is created for handling large-scale projects
such as major innovation or a new product line 0.621
Here, there is an emphasis on members of cross-
functional Task Forces/Teams to report to both the
product and the functional manager 0.632
A general tendency here is that with the changing of
products, markets and partners, the organization
regularly reshuffles its employees to get correct mix of
skills and capabilities 0.666
5. In my organization, every department has one employee Hybrid structure
who is exclusively responsible for communicating and
achieving coordination with other departments when the
need arises 0.503
Here, Task Forces are created regularly, which have
members from every other department affected by a
problem. Such Task Forces are disbanded after the tasks
are accomplished 0.471
This organization strictly follows a functional organizational
Table II. structure only 0.724
Measurement items in Organizational functions that are important to each
organizational structure product or market are decentralized to self-contained
questionnaire, factor units. Other functions requiring economies of scale are
loading and naming of centralized 0.555
extracted factors (continued)
 Factor Naming Structuring
Factor Measurement items loading of factors organizations
6. The maximum time of managers is spent on managing Modular structure
across industries
relationships with partners/vendors and in resolving
conflicts 0.639
My organization does not believe in huge investments
in factories, equipment, warehouses or distribution 963
facilities but prefers to rely exclusively on the partners/
vendors 0.794

7. During the redesigning of products/services, all the group Divisional structure

members that are to be drawn from different departments
for such an effort are temporarily moved to a prototype
factory/company until the project is completed 0.779
My organization strictly follows a product/divisional/
SBUs organizational structure only 0.531 Table II.

Sum of squares df Mean square F Sig.

Vertical linkage Between groups 1,093.481 5 218.696 53.568 0.000

Within groups 1,682.024 1,518 4.083
Total 2,775.505 1,523

Horizontal linkage Between groups 775.306 5 155.061 32.024 0.000

Within groups 1,994.895 1,518 4.842
Total 2,770.201 1,523

Functional structure Between groups 33.737 5 6.747 2.109 0.063

Within groups 1,317.813 1,518 3.199
Total 1,351.550 1,523

Matrix structure Between groups 182.657 5 36.531 8.106 0.000

Within groups 1,856.788 1,518 4.507
Total 2,039.445 1,523

Hybrid structure Between groups 262.424 5 52.485 15.200 0.000

Within groups 1,422.629 1,518 3.453
Total 1,685.053 1,523

Modular structure Between groups 102.183 5 20.437 9.514 0.000

Within groups 885.006 1,518 2.148
Total 987.189 1,523 Table III.
ANOVA, one way for
Divisional structure Between groups 54.776 5 10.955 6.454 0.000 extracted dimensions of
Within groups 699.301 1,518 1.697 organizational structure
Total 754.077 1,523 across industries
MRN forms of organizational structuring are customized by enterprises to suit a particular
32,10 industry segment because their operational and general environments differ
significantly.
Some deep-seated implications emerge for businesses in an emerging economy like
India. These findings of this study will guide decision-makers in industries as well as
scholars and management practitioners who are contemplating the design of an
efficient and effective structural architecture for competitive advantage and
964 organizational excellence.

Discussion
Organizational structures can deliver competitive advantage, and consequently the
structural design of organizations should carefully analyze current and potential business
challenges and problems. The findings of the study support the contention of the
contingency theorists, who advocate that appropriate organizational structures depend on
environmental factors that include stability and complexity (Burns and Stalker, 1961). As
Mintzberg (1989) also point out, size, age and the technological system matter.
While similarities exist across industries in structuring organizations, these
industries differ significantly in terms of their structural architecture. Furthermore, the
results suggest that organizations across industries have particular preferences for one
structural form over other forms in order to sharpen their responses in the thriving and
competitive emerging economy of India.
All of the six industries represented in this study prefer the divisional and modular
forms of organizational structure with vertical linkages. The divisional structure
includes the notion that the organization should be divided into separate units based
on different products or markets in order to be managed effectively (Pascale, 1990).
This engenders a mechanistic structure. On the other hand, the modular structure
extends the concept of horizontal coordination and collaboration beyond the
boundaries of the traditional organization type. As a result, the organization
subcontracts many of its major processes to separate companies and coordinates their
activities from a small headquarters organization (Daft, 2004).
The divisional and the modular structures are two different philosophical
approaches to structuring organizations for excellence. To leverage these two different
philosophies in operation, the role of extra-organizational factors cannot be ignored.
Therefore, the preference and usage of vertical linkage have been included in all the
organizations across the six different industries in India to provide added strength to
the divisional and modular organizational architectures. This is especially a wise move
given the predisposition for organizations in emerging economies to succumb to the
problems inherent in such economic environments. In other words, it is assumed that

Figure 1.
Graphical representation
of structural architectures
across Indian industries
through vertical linkages, organizations across Indian industries endeavor to Structuring
compensate for the drawbacks of the divisional and the modular structures. Adopting
these structural architectures by top management teams in India may be attributed to
organizations
the influence of the Indian national culture as well as the threats and opportunities that across industries
go hand-in-hand with operating in a volatile external environment.
The journey of Indian organizations from purely bureaucratic structures to now
include divisional and modular structures may be attributed to two factors. The Indian
society has slowly but steadily emerged from 200 years of bureaucratic colonial rule.
965
The national culture has slowly but steadily become more democratic and consultative
in nature. As a result, significant changes have occurred in structuring organizations
in the Asian sub-continent and this is a welcome sign.
At the same time, differences still exist in societal culture of the Indian sub-continent
and the Western world. Therefore, the foreign multinational companies operating in
India must adjust by customizing their structural architecture in accordance with the
characteristics Indian national culture and history. Indian work culture exhibits a high
power-distance, collectivism and affective reciprocity among the cultural values of
Indian managers (Chhokar, 2000; Sinha, 1997). With respect to uncertainty avoidance,
while Hofstede (1997) suggests that India is high on uncertainty avoidance, a later
study by Chhokar (2000) found India to be moderate on this dimension. However, what
is certain is that the structural architecture of organization needs to be consistent with
the cultural fabric of the nation if excellence at workplace is to be achieved. Therefore,
it is anticipated that further research will support the finding that divisional and
modular structures with vertical linkages will effectively help achieve the twin goals of
business performance and the needs of people at workplace bearing in mind the
prevailing cultural factors within India.
To date, the discussion has focused on the overall characteristic features of the
structural patterns of industries in India. Revisiting Figure 1 provides some interesting
insights at the micro-level of organizations. We find that the divisional and modular
structures with horizontal linkages are dominant structural patterns in all six industry
segments. Yet, differences between these six industries remain when the back-up
structural architecture is considered.
The findings suggest that companies in the IT/ITeS, telecom and retail industries give
roughly equal weightage to other elements of structural forms (that is, horizontal
linkages, functional, matrix and hybrid structures) whereas organizations in the banking
industry prefer the matrix structure as a back-up to effectively manage any kind of
internal or external challenges and problems. On the other hand, the hospital and the
automobile industries rely heavily upon horizontal linkages as the back-up to cope with
any similar challenges, which may not be effectively dealt with by the divisional and
modular structures with vertical linkages. These structural differences at the micro-level
may be attributed to the fact that every industry has different business compulsions,
which require slightly different permutations and combinations in the structural design.
Hence, differences are noted in the structural frameworks to bring about internal
integration and external adaptation – there are similarities as well as differences among
the banking, IT/ITeS, hospitals, automobiles, telecom and retail industries in India.
Similarities may be attributed to the influence of national culture while dissimilarities
may be attributed to differences in nature of the business, the use of technology, the
demography of human resource and nature of competition in the industry.
The different organizational structures for banking, IT/ITeS, hospitals, automobiles,
telecom and retails industries may be considered as competitive advantages. Given the
MRN relatively large sample of the study, the findings may assist managers of new and
32,10 established organizations design an organizational structure that delivers competitive
advantage in India and abroad. Nevertheless, the ideal structural architecture for
organizations in one industry should not necessarily be adopted by organizations in
different industries. Ultimately, the business context is one key to the design of a
successful organizational structure.
966 Conclusions and limitations
There are two limitations of this study. Firstly, it did not make comparisons of
organizational structure among different units within the same enterprise in operation
in different parts of the world. Secondly, the study did not make a comparison between
industries in India with their international counterparts. Future research is predicted in
this field. Nevertheless, the scope of the study was organizations operating in India and
the study concluded that the future is bright for industries. In fact, Indian
organizations may benefit from taking on board the main findings of this study, which
brought to the fore several significant issues concerning structuring organizations.
The findings of the study will contribute to Indian business knowledge because few
empirical studies on the topic exist in the Indian context about what constitutes an
effective structural architecture across industrial sectors. It is hoped that the
management practitioners will internalize the findings of this study to secure
competitive advantages by structuring their organization to suit their environment.

Implications for Indian business

The study has important implications for business organizations in India that have
experienced the wonder and dread of operating in a rapidly emerging economy. The
main implications of the study are summarized below:
. Organizations belonging to any industrial sector need organizational structures,
which emphasizes divisional and modular structures with vertical linkages. This
kind of structure was found to meet the current needs of organizations in
successfully realizing their corporate goals. At the same time, organizations can
fall back on a different structural mode whenever the situation of their business
demands.
. Organizations in the banking sector should strive for a matrix structure with
divisional and modular structures with vertical linkages to fall back on
whenever difficulties are encountered. This would help banking organizations to
ward off problems in their business environment.
. Organizations in the IT/ITeS and telecom sector should have the divisional and
modular kinds of structures with vertical linkages but they should equally
emphasize functional, matrix and hybrid kinds of organizational structure if
they find themselves in adverse circumstances.
. Organizations in the hospitals and automobiles sectors need to practice
horizontal integration along with vertical linkages in their divisional and
modular forms of structural architecture. The findings of the study imply that
many firms in this sector also create the modular form of structure in minority of
situations to create and promote excellence in the workplace.
. Organizations in the retail sector have placed maximum emphasis on both the
modular and divisional forms of organizational structure. However, whenever
 the situation demands, the retail organizations can erect an organizational Structuring
structure, which places an equal emphasis on functional, hybrid and matrix organizations
structures with both vertical and horizontal linkages.
across industries
In conclusion, the dominant form of organizational structure for Indian business
organizations across industries remains similar, although some significant differences
can be identified in their back-up plans. It is also hoped that the findings and
implications of the study will help managers grapple with the pressing problems of 967
design organizational structures suited to the emerging economy of India.

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About the author

Sanjay Kumar Singh, PhD, is an associate professor in HRM at Institute of Management
Technology, Ghaziabad, India. He is an active researcher with articles published in numerous
journals in India and abroad. Dr Singh’s research interests include organizational culture and
structure, emotional intelligence, organizational learning, knowledge management and
leadership. He teaches courses in Organizational Change and Development, Psychological
Testing, Organizational Behavior and Organization Theory and Design. Sanjay Kumar Singh
can be contacted at: sanjaysinghdu@yahoo.com

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