This study explores the effects of the fit between technological innovation and organization structure on small business financial performance. Support was found for technology-structure fit as a predictor of financial performance in small businesses. The study also explores the moderating effects of firm age and of sales growth on the relationship between fit and financial performance. Regression analyses indicate that the relationship between fit and financial performance is not significantly affected by the age of small businesses, but it is significantly influenced by the rate of growth of small businesses. Fit has a significant positive relationship with financial performance for low sales growth companies, but it is unrelated to performance in high sales growth companies.
Get full access to this article
View all access options for this article.
References
1.
AlexanderJ., & RandolphW. A. (1985). The fit between technology and structure as a predictor of performance in nursing subunits.Academy of Management Journal, 28, 844–859.
2.
ArgoteL. (1982). Input uncertainty and organizational coordination in hospital emergency units.Administrative Science Quarterly, 27, 420–434.
3.
BrophyD. J. (1986). Venture capital research. In SextonD. L., & SmilorR. W. (Eds.), The art and science of entrepreneurship, pp. 119–144. Cambridge, MA: Ballinger.
4.
BrushC. G., & VanderWerfP. A. (1990). Measuring performance of new ventures. Paper presented at the Babson Entrepreneurship Conference, Wellesley, MA.
5.
CarrolG. R., & DelacroixH. (1982). Organizational mortality in the newspaper industries of Argentina and Ireland: An ecological perspective.Administrative Science Quarterly, 27, 169–198.
6.
ChurchillN. C., & LewisV. L. (1983). The five stages of small business growth.Harvard Business Review, May-June, 30–50.
7.
CovinJ. G., & SlevinD. P. (1989). Strategic management of small firms in hostile and benign environments.Strategic Management Journal, 10, 75–85.
8.
DavidF. R., PearceJ. A.II, & RandolphW. A. (1989). Linking technology and structure to enhance group performance.Journal of Applied Psychology, 74, 233–241.
9.
DessG. G., & RobinsonR. B.Jr. (1984). Measuring organizational performance in the absence of objective measures: The case of the privately held firm and conglomerate business unit.Strategic Management Journal, 5, 265–273.
10.
DewarR., & WerbelJ. (1979). Universalistic and contingency predictions of employee satisfaction and conflict.Administrative Science Quarterly, 24, 426–448.
11.
DrazinR., & KazanjianR. K. (1990). A reanalysis of Miller and Friesen's life cycle data.Strategic Management Journal, 11, 319–325.
12.
DrazinR., & Van de VenA. H. (1985). Alternative forms of fit.Administrative Science Quarterly, 30, 514–539.
13.
Dun and Bradstreet Business Credit Services. (1990). Industry norms and key business ratios, desk top edition, 1989-90.New York: Dun & Bradstreet, Inc.
14.
Federal Register. (1988). Small business size standards; Modification of size standards to make existing size standards compatible with 1987 standard industrial classification system, Vol. 53, No. 101, 18821–18834.
15.
FisherR. (1970). Tests of equality between sets of coefficients in two linear regressions: An expository note.Econometrics, 28, 361–366.
16.
FredricksonJ. W., & MitchellT. R. (1984). Strategic decision processes: Comprehensiveness and performance in an industry with an unstable environment.Academy of Management Journal, 27, 399–423.
17.
FryL., & SlocumJ.Jr. (1984). Technology, structure, and work group effectiveness: A test of a contingency model.Academy of Management Journal, 27, 221–240.
18.
GalbraithJ. R. (1973). Designing complex organizations.Reading, MA: Addison-Wesley.
19.
GatsonisC., & SampsonA. R. (1989). Multiple correlation: Exact power and sample size calculations.Psychological Bulletin, 106, 516–524.
20.
GreinerL. E. (1972). Evolution and revolution as organizations grow.Harvard Business Review, July-August, 37–46.
21.
GuptaA. K. (1987). SBU strategies, corporate-SBU relations, and SBU effectiveness in strategy implementation.Academy of Management Journal, 30, 477–500.
22.
JohnstonJ. (1972). Econometric methods (2nd ed.). New York: McGraw-Hill.
23.
JoyceW., SlocumJ. W., & VonGlinowM. (1982). Person-situation interactions: Competing models of fit.Journal of Occupational Behavior, 3, 265–280.
24.
KaplanR. S. (1984). Yesterday's accounting undermines production.Harvard Business Review, 62(4), 95–101.
25.
KazanjianR. K. (1988). The relation of dominant problems to stage of growth in technology-based new ventures.Academy of Management Journal, 31, 257–279.
26.
KemeryE. R. (1988). Some psychometric concerns with small business research. Paper presented at the annual USASB meeting, Monterey, CA.
27.
KimberlyJ. (1979). Issues in the creation of organizations: Initiation, innovation and institutionalization.Academy of Management Journal, 22, 437–457.
28.
KimberlyJ., & EvaniskoM. (1979). Organizational technology, structure, and size. In KerrS. (Ed.), Organizational behavior, pp. 263–288. Columbus, OH: Grid Publishing.
29.
LeiferR., & HuberG. P. (1977). Relations among perceived environmental uncertainty, organization structure, and boundary spanning behavior.Administrative Science Quarterly, 22, 235–247.
30.
MillerD. (1982). Evolution and revolution: A quantum view of structural change in organizations.Journal of Management Science, 19, 131–151.
31.
MillerD., & FriesenP. (1980). Momentum and revolution in organizational adaptation.Academy of Management Journal, 23, 591–614.
32.
MillerD., & FriesenP. (1984). A longitudinal study of the corporate life cycle.Management Science, 32, 608–621.
33.
MintzbergH. (1987). Crafting strategy.Harvard Business Review, 65(4), 66–87.
34.
PerrowC. (1970). Organizational analysis: A sociological view.Belmont, CA: Wadsworth.
35.
PorterM. E. (1980). Competitive strategy.New York: The Free Press.
36.
QuinnR., & CameronK. (1980). Organizational life cycle stages and models of effectiveness. Paper presented at the A.P.A. Convention, Montreal.
37.
QuinnR., & CameronK. (1983). Organizational life cycles and shifting criteria for effectiveness.Management Science, 29, 33–51.
38.
RandolphW. A., & DessG. G. (1984). The congruence perspective of organization design: A conceptual model and multivariate research approach.Academy of Management Review, 9, 114–127.
39.
RomanelliE., & TushmanM. L. (1986). Inertial environments and strategic choice: A quasi-experimental design for comparative longitudinal research.Management Science, 32, 608–621.
40.
SchoonhovenC. (1981). Problems with contingency theory: Testing assumptions hidden within the language of contingency theory.Administrative Science Quarterly, 26, 349–377.
41.
SteersR. M. (1977). Organizational effectiveness: A behavioral view.Santa Monica, CA: Goodyear Publishing Co.
42.
StinchcombeA. L. (1965). Social structure and organizations. In MarchJ. G. (Ed.), Handbook of organizations, pp. 142–193. Chicago: Rand-McNally.
43.
ThompsonJ. (1967). Organizations in action.New York: McGraw-Hill.
44.
TimmonsJ. A. (1987). Venture capital: More than money? In PrattS. E., & MorrisJ. K. (Eds.), Pratt's guide to venture capital sources (11th ed.), pp. 47–51. Wellesley, MA: Venture Economics.
45.
TushmanM. L., & RomanelliE. (1985). Organizational evolution: A metamorphosis model of convergence and reorientation. In CummingsL. L., & StawB. M. (Eds.), Research in organizational behavior, 7, 171–222. Greenwich, CT: JAI Press.
46.
VentrakamanN. (1989). The concept of fit in strategy research: Toward verbal and statistical correspondence.Academy of Management Review, 14, 423–444.
47.
VenkatramanN., & RamanujamV. (1986). Measurement of business performance in strategy research: A comparison of approaches.Academy of Management Review, 11, 801–814.
48.
WooC. Y., & CooperA. C. (1981). Strategies of effective low share business.Strategic Management Journal, 2, 301–318.
49.
WoodwardJ. (1965). Industrial organization.London: Oxford University Press.
50.
WortmanM. S. (1987). Entrepreneurship: An integrating typology and evaluation of the empirical research in the field.Journal of Management, 13(2), 259–280.
51.
ZwermanW. (1970). New perspectives on organization theory.Westport, CT: Greenwood.
