Academic journal article Indian Journal of Industrial Relations

Impact of Organizational Size & Alliance Formations on Perceived Organizational Performance

Academic journal article Indian Journal of Industrial Relations

Impact of Organizational Size & Alliance Formations on Perceived Organizational Performance

Article excerpt


The present work is an empirical attempt to explore how organizational performance differs across the factors of organizational size and alliance formations within the context of two wheeler manufacturing organizations in the post-liberalization period in India. The impact of organizational size and alliance formations would be seen on the measures of organizational performance in terms of perceived organizational effectiveness, employee's morale, and turnover intentions. The auto industry in general and two wheeler organizations in particular is a good place to examine this question because liberalization and globalization of the economy has created environmental change for these firms. A recent work by Siggelkow and Levinthal's (2003) examined the firm's performance when competitive landscape shifts-a shock in the environment. Davis, Eisenhardt and Bingham (2009) found that 'the amount of structure" was central when the environment yielded a continuing flow of opportunities. The structure helps in achieving a dynamic fit between the organizational architecture and the environment (and other contingencies) which yields good performance (Nissen & Burton 2011). Organizational size and alliance formations are two important parts of the organization's environment (Daft 2004) that may influence the internal functioning of the organization. Post-liberalization, the changing organizational environment has resulted in changes in organizational size and alliance formations status of Indian organizations. The present work explores the effect of firm size and alliance formations on organizational performance from the host country alliance partner's perspective.

Organizational Size

What should be the size of a firm for its better functioning has always been a critical issue (e.g., Baker & Cullen 1993, Friedman 1998). The size varies from large manufacturing organizations to modern service oriented small size software companies and boundaryless organizations (Fulk & Desanctis 1995). That organizational size is taken as one of the important contextual organizational dimensions (Daft 2003) underlie an organization's structure and work processes. For example, large organization size tends to create an organization that has greater formalization, specialization and centralization (Blau & Schoenher 1971, Blau 1971). The management, sociological and psychological literatures have provided the conceptualization of the development and implications of organizational structure (e.g., Pugh, Hickson, Hinings & Turner 1969).

Most of the studies using organizational size as a variable, define it as the total number of employees (Kimberly 1976). Using the number of total employees as the measure of organizational size inherently mixes size with efficiency (Gupta 1980). Most of the evidences suggest that counting the total number of employees is as good as many other measures of size. For instance, one study found the correlation between number of employees and the organization's net assets to be .78 (Pugh, Hickson, Hinings & Turner 1969). Most scholars call organizations large when they employ more than fifteen hundred to two thousand employees (Robey 1986, Daft 1986). Organizations with fewer than fifteen hundred employees tend to be labeled "small".

In recent times, the nature and character of Indian organizations have changed because of technological advancements, severe market competition, rapidly changing preferences consumers, and integration with the world economy. Thus Indian organizations are moving from labour intensive to capital intensive organizations, from production to service organizations, from national to multinational organizations, from independent to interdependent organizations (Miles & Snow 1992), from large size to small or medium size organizations, from value creation inside to value creation outside the organization (outsourcing) etc. …

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