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Changing Organizational Designs and Performance Frontiers

Author

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  • Andrew H. Van de Ven

    (Carlson School of Management, University of Minnesota, Minneapolis, Minnesota 55455)

  • Ricky Leung

    (School of Medicine, University of Missouri, Columbia, Missouri 65212)

  • John P. Bechara

    (Olin Business School, Washington University in St. Louis, St. Louis, Missouri 63130)

  • Kangyong Sun

    (Graduate School of International Corporate Strategy, Hitotsubashi University, 101-8439 Tokyo, Japan)

Abstract

This paper develops and tests a multilevel organizational contingency theory for designing headquarters–subsidiary relations. We use frontier analysis to overcome problems that have hampered advancements in organizational contingency theory in general and headquarters–subsidiary relationships in particular. Based on a longitudinal study of a large medical group practice of 32 local community clinics, we compute the relative distance of clinics from a best-performance frontier, determine what proportions of changes in clinic performance are due to factors that are endogenous or exogenous to the clinics, and examine the organizational factors that may explain these performance changes. We find that uniform headquarters policies have differing effects on the performance of subsidiary units, benefiting some and hindering others through no fault of their own. We also find significant performance volatility with different types of unit designs, suggesting the need to examine the risks of changing organization designs.

Suggested Citation

  • Andrew H. Van de Ven & Ricky Leung & John P. Bechara & Kangyong Sun, 2012. "Changing Organizational Designs and Performance Frontiers," Organization Science, INFORMS, vol. 23(4), pages 1055-1076, August.
    • Handle: RePEc:inm:ororsc:v:23:y:2012:i:4:p:1055-1076
    DOI: 10.1287/orsc.1110.0694
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