Organizational Structure and Firm Innovation in a Retail Chain

Myong-Hun Chang () and Joseph E. Harrington ()
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Myong-Hun Chang: Cleveland State University
Joseph E. Harrington: The Johns Hopkins University

Computational and Mathematical Organization Theory, 1998, vol. 3, issue 4, No 3, 267-288

Abstract: Abstract Two organizational structures for a retail chain are examined fortheir effect on the rate of firm innovation. A centralized organization isdefined as one in which store practices are mandated from corporateheadquarters (HQ) and this results in HQ being the sole source of new ideas.A decentralized organization gives freedom to store managers to adopt theirown ideas and disseminates innovations made by store managers. Thedifference in average profit between the centralized and decentralizedorganizations is found to be a non-monotonic function of innovativeopportunities. The centralized organization is preferred when innovativeopportunities are moderate while the decentralized organization is preferredwhen such opportunities are rich. Centralization also tends to fare betterin environments in which ideas are relatively complex.

Keywords: organizational structure; innovation; retail chains (search for similar items in EconPapers)
Date: 1998
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Citations: View citations in EconPapers (6)

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DOI: 10.1023/A:1009657511505

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