Managers often see new organizational design as the solution to many problems. This paper explores the relationship between organization structure (design), functioning of organizations, and effectiveness. A study of 320 companies showed that the structural variable, decentralization, marginally affected the way in which organizations function. Functional variables had a minor impact on profitability. No direct relationship between structure and effectiveness was found. When functioning is conceptualized as a mediating factor no direct causality between structure and effectiveness is implied, but a relationship between structure, function and effectiveness. To improve effectiveness, reorganizing is probably not the first option to consider.
The Up-scaling Organization Structure Design: an Axioms Based Concept
