Page 1 of 10
Journal for Studies in Management and Planning
Available at http://internationaljournalofresearch.org/index.php/JSMaP
e-ISSN: 2395-0463
Volume 01 Issue 07
August 2015
Available online: http://internationaljournalofresearch.org/ P a g e | 613
Organizational Structure and Internal Processes of Large
Manufacturing Firms in Kenya
Paul Muturi Kariuki,
University of Nairobi, Kenya Department of business administration School of Business
paulmuturikariuki@gmail.com
Abstract
The specific objective of this study was to
determine the effect of organization
structure on internal processes of large
manufacturing firms in Kenya. The
specific objective of this study was to
determine the influence of organizational
structure on internal processes of large
manufacturing firms in Kenya. The study
was a cross sectional survey targeting 102
large manufacturing firms and the
response rate was from 94 firms. The data
was analyzed using Statistical Package
for Social Sciences. Null hypothesis was
tested and results indicated that
organizational structure had influence on
internal processes. The study was limited
in that change of variables of study was
not monitored or observed over time as
would be the case with longitudinal
studies.
Key terms: Organizational structure,
Internal processes , Manufacturing firms,
Performance, Formalization,
Centralization
Introduction
There have been debate whether
organizational structure influence internal
processes or not. The study aimed at
establishing the position regarding this
debate in Kenya large manufacturing
firms. Organizational structure is how the
organization is designed to meet its goals
and objectives. This study used internal
processes as measure of performance. The
Kenya manufacturing sector decelerated
from an expansion of 3.4 percent in 2011
to a growth rate of 3.1 percent in 2012.
The slower growth was due to high cost of
production, stiff competition from
imported goods, high cost of credit and
political uncertainty due to the 2013
general elections (Kenya National Bureau
of Statistics (KNBS), 2013).
Manufacturing exports are targeted at
Page 2 of 10
Journal for Studies in Management and Planning
Available at http://internationaljournalofresearch.org/index.php/JSMaP
e-ISSN: 2395-0463
Volume 01 Issue 07
August 2015
Available online: http://internationaljournalofresearch.org/ P a g e | 614
both regional markets, including the
Common Market for Eastern and
Southern Africa (COMESA) and the East
African Community (EAC) as well as
European and American markets. Kenyan
manufacturers have in recent years
through African Growth Opportunity Act
(AGOA) and associated export processing
zones, increased exports of textiles,
mainly targeting the US market.
Karabag and Berggren (2013) study,
based on 1,000 largest manufacturing
firms in Turkey found that firm related
factors did not significantly influence
performance, instead factors related to
industry structure and business groups
membership were the strongest
determinants of firm perspective. Chen
(2010) showed that firm factors explained
a substantial part of Korean and Taiwanne
firm performance. Zheng, et al., (2010)
study observed a negative effect of
structure on organizational effectiveness.
Review of previous studies indicates they
have been conflicting results and this
study sought to determine the relationship
of organizational structure and internal
processes of large manufacturing firms in
Kenya.
Research Objective
The specific objective was to determine
the influence of organizational structure
on internal processes of large
manufacturing firms in Kenya.
Literature Review
Chandler (1962) substantiated ‘structure
follows strategy' thesis based on four case
studies of American conglomerates that
dominated their industry from the 1920's
onward. The ensuing debate on the
contingent relationship between strategy,
structure, and firm performance flourished
in the 1970s and 1980s. Researchers have
used ground-breaking work by Chandler
(1962) to build the Strategy-Structure
Performance (SSP) paradigm, which has
become the most important sub stream of
research on structural contingency theory
(Galunic & Eisenhardt, 1994). Rather than
seeing each of strategy or structure alone
having an important impact on
performance, the paradigm holds that it is
the linkage between them that is important
(Lenz, 1980; Miller, 1988). According to
Akinyele (2011) the organizational
structure and strategies adopted by oil and
gas marketing companies affect market
share positively. Lavie (2006) gave
evidence that the level of organizational
Page 3 of 10
Journal for Studies in Management and Planning
Available at http://internationaljournalofresearch.org/index.php/JSMaP
e-ISSN: 2395-0463
Volume 01 Issue 07
August 2015
Available online: http://internationaljournalofresearch.org/ P a g e | 615
structure and strategies was positively
related to company effectiveness. Grewal
and Tansuhaj (2001) reported that more
successful companies had well defined
organizational structures in sharp contrast
to less successful companies. Focusing on
large firms (Ekpu, 2004) found a positive
relationship between the unstructured
organizational patterns and large firm
financial performance.
Organizational structure is normally
described as the way responsibility and
power are allocated, and work procedures
are carried out among organizational
members. Robbin and DeCenzo (2005)
argue that the organizational structure
performs a significant role in the
achievement of organization’s set
objectives and accomplishment of its
strategic goals and direction. The
organizational structure becomes more
relevant when it is in harmony with the
objective mission, competitive
environment and resources of the
organisation. The believe “one cap fits
all” is non-existence in an organizational
structure design as no two firms are
entirely similar and as such faces different
challenges from its environment.
Mansoor, et al., (2012) asserted that
performance effect of organizational
structure is moderated by changes in the
environment and hence, conclude that to
attain desired superior performance by an
organization, adequate attention is
required to have organizational structure
that can match the prevailing environment
dynamism in place. These structures are
characterized with different attributes
such as control, communication,
organizational knowledge, task, prestige,
governance and values. Hajipour, et al.,
(2011) studied on relationship between
industry structure, strategy type,
organizational characteristics and
performance. The results indicated that
industry structure determine
organizational characteristics. Mansoor, et
al., (2012) contended that ideal
organizational structure is a recipe for
superior performance.
Organizational structures are discussed in
the extant literature with reference to two
key factors; formalization and
centralization (Bucic & Gudergan, 2004).
Organizational structure includes the
nature of layers of hierarchy,
