Page 1 of 9
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 | 623
Organizational Structure and Customer perspective 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 customer perspective of large
manufacturing firms in Kenya. The specific
objective of this study was to determine the
influence of organizational structure on
customer perspective 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 customer
perspective. 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,
Customer perspective, Manufacturing firms,
Performance, Formalization, Centralization
Introduction
There have been debate whether
organizational structure influence
performance 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 customer
perspective 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 both regional markets, including
the Common Market for Eastern and
Southern Africa (COMESA) and the East
African Community (EAC) as well as
Page 2 of 9
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 | 624
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 customer
perspective of large manufacturing firms in
Kenya.
Research Objective
The specific objective was to determine the
influence of organizational structure on
customer perspective 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
structure and strategies was positively
related to company effectiveness. Grewal
and Tansuhaj (2001) reported that more
Page 3 of 9
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 | 625
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, centralization of authority, and
horizontal integration. It is a multi- dimensional construct in which concerns:
work division especially roles or
responsibility including specialization,
differentiation or departmentalization,
centralization or decentralization,
