Organization Structure and Productivity

Abstract

This study examined the relationship between three structural variables (size, vertical complexity, and administrative intensity) and the operating efficiency of all 234 metropolitan branches of a financial services company. As hypothesized, negative relationships were found between (a) size and productivity and (b) vertical complexity and productivity; however, the predicted negative relationship between (c) administrative intensity and productivity was not found — instead a curvilinear relationship emerged. On average, the smallest branches were approximately 31% more efficient than the largest ones; those with the least vertical complexity (one hierarchical level) were roughly 44% more productive than those with the greatest complexity (five levels).