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Ekonika : Jurnal Ekonomi Universitas Kadiri ISSN (Online) 2581-2157
Volume 8 No. 2 Tahun 2023 ISSN (Print) 2502-9304
This is an open access article under CC-BY-SA license.
Available at :
http://ojs.unik-kediri.ac.id/index.php/ekonika
Optimization of Organizational Design as A Strategy to
Improve Organizational Performance: Systematic Literature
Review
Bambang Gunawan1, Nurdiana Hera Nurul Fitri2
1Mahasiswa Program Doktor Universitas Teknologi Yogyakarta
2MAN 3 Yogyakarta
Email : bambanggunawan2023@gmail.com
ABSTRACT
Article History
:
This research is a literature study that reviews strategies for improving
organizational performance through optimizing organizational design.
The articles reviewed are articles that discuss organizational design
and organizational performance. The review method used is a
systematic literature review. The search for articles begins in 2016 –
2022. All articles sought are in English. Based on the search results
obtained 988 articles. After the data inclusion and exclusion process
was carried out, 18 potential articles were obtained for in-depth
analysis. Based on the results of the synthesis carried out, it can be
concluded that the role of organizational design is very visible in
improving organizational performance. In addition, organizational
design encourages the emergence of organizational innovation which
ultimately encourages increased organizational performance.
Received
:
01 - 06 - 2023
Revised
:
05 - 08 - 2023
Accepted
:
28 - 08 - 2023
Keywords:
Organizational Design;
Organizational Performance;
Systematic Literature Review
INTRODUCTION
Organizational performance is an important aspect of the organization; this was
revealed by (Suhag et al., 2017). In addition, good organizational performance can
encourage the emergence of a good image in society or among customers. An essential
impact of an organization with good performance is that it will provide customer
satisfaction, employee satisfaction, and financial performance. Of course, it can
become a competitive advantage for the organization (Capelle, 2014). The literature
has widely explained that organizational performance can be influenced by many
factors, namely employee satisfaction, employee compensation, and the attractiveness
of an organizational design (Imran et al., 2021). Organizational performance includes
actual productivity or business results that have been obtained. Good performance is
the target of every organization. Organizational performance is the organization's
achievement while carrying out its business activities. The size of an organization that
has good performance is increasing profits, lots of customers, and its products are in
demand (Suhag et al., 2017)
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Organizational performance is an essential issue for every profit and non-profit
organization. Managers need to know which factors influence organizational
performance. So they take the proper steps to get started. Researchers define
organizational performance differently. According to Imran et al., (2021),
organizational performance is an organization's ability to achieve its goals using
resources effectively and efficiently. Meanwhile, Nguyen et al., (2021) define
organizational performance as an organization's ability to achieve its goals and
objectives. According to Alam (2022), organizational performance is related to
organizational survival. Many previous studies have focused on the relationship
between organizational design and organizational performance (Baporikar & Randa,
2020; Yan et al., 2020). Previous studies have supported the effect of organizational
design on organizational performance (Rovelli & Butticè, 2020).
Kornberger (2016) describes organizational design as the process of creating an
efficient and effective organization in line with strategic objectives. The organizational
design ensures that the organization works well using available resources to deliver
the expected results. Poorly designed organizations indicate that such organizations
require much time, spend more money and lose more staff (Kretschmer & Khashabi,
2020). In addition, according to Baumstark (2020), symptoms of ineffective
organizational design include a lack of coordination between offices, excessive friction
and conflict between internal groups, unclear roles, misuse of resources, poor
workflow, and reduced response to change. Organizational design is positioned
between organizational theory and management as a discipline that aims to create
efficient organizations (Chang et al., 2017). Therefore, it is essential to conduct a more
in-depth study of the role of organizational design in improving organizational
performance.
Research interest in organizational performance improvement strategies has
continued to increase in recent years (Chang et al., 2017). This study is essential
because good organizational performance is a measure of the success of an
organization. The better the performance of an organization, encourages more
cooperation from various parties. Collaboration can include cooperation in terms of
product development, cooperation in terms of production of goods, and others.
This research is based on the literature that has been collected. The data that has
been collected is then analyzed to obtain the desired information. The information
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contained in the article will be used to answer research questions. Furthermore, this
research contributes to the existing literature on organizational performance
improvement strategies. In addition, this study provides new information that can be
used as a consideration for managers or leaders in formulating strategies to improve
organizational perform essential important. The aspect of the results of this study is
the existence of guidelines that serve as the basis for decision-makers within the
organization. This study aims to determine the strategy for increasing organizational
per bye through optimizing the designed organization owned.
LITERATURE REVIEW
Organizational Performance
Organizational performance is an important aspect often widely studied in corporate
literature. Organizational performance is related to many parts of organizational
survival. Researchers say many factors can affect overall organizational performance,
such as employee commitment, job satisfaction, innovation, and corporate design
(Imran et al., 2021). In this research, organizational design and innovation have a
positive impact on the formation of organizational performance. The more innovative
an organization is, the better the performance of the organization because, through
innovation, many products or services can be produced. Organizational design is also
an essential aspect of supporting better organizational performance.
Organizational Design
An organization consists of several divisions or departments that have their respective
tasks but still have the same goal of achieving organizational goals. Each department
has its duties and ways of completing tasks. Within the organization, there is
organizational design; the role of organizational design is to divide the organization's
overall goals into smaller components that each department can complete (Grimpe et
al., 2018). Put, organizational design is about defining goals and tasks within the
organization. Organizational design is needed so that there is a balance and achieving
the desired organizational goals and winning the competition (Malets, 2017).
Innovations
The term innovation refers to a statement that is doing something different (Greenan
& Napolitano, 2021). Innovation includes something risky, expensive, and time-
consuming. Innovation can encourage the creation of new processes, goods, services,
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and technologies. In addition, innovation can bring organizations new ideas and
economic and commercial benefits (Domínguez Escrig et al., 2020). Innovation is
needed in organizational life; the more significant the lean organization's innovation
leveler, the resulting performance. Innovation can consist of product, managerial, and
radical, revolutionary innovation (Rovelli & Butticè, 2020). Innovation is a topic that
many researchers have studied because innovation can provide changes in
organizations. Innovation is related to implementing ideas that arise from many
employees in the organization. Innovation is deliberately encouraged so organizations
can continue producing products that can solve societal problems. In addition,
innovation can be an advantage for organizations to compete in business competition.
For this reason, organizations are required to adopt new technologies (Imran et al.,
2021).
Digital transformation
Digital transformation has penetrated all sectors of activity, so this digital
transformation cannot be avoided (Kretschmer & Khashabi, 2020). Digital
transformation is a fundamental change made to adapt to the business environment
and, of course, to win the competition. Digital transformation is one of the main
transformation directions in the modern economy. Digital transformation goes beyond
digitizing resources and generating the value and revenue that digital assets create
(Anshin & Bobyleva, 2021). Digital transformation is needed because of its vital role in
the organization. What happens in the digital transformation process is a change in the
logic of business activities. In addition, digital transformation has changed
organizational behavior to be more dynamic. All business activities have become more
effective and efficient because of the support of technology.
Conceptual Models
Figure 1. Conceptual Model
Organizational
Design
Organizational
Performance
Digital
Transformation
Innovation
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METHODS
This study uses a systematic literature review approach. A systematic literature
review aims to identify, track, and comprehensively assess all literature on a topic
(Petticrew & Roberts, 2008). In addition, this method is used to summarize the primary
studies' results, check for consistency among them, and reduce biased results from
previous studies.
The stages in a systematic literature review are formulating research questions,
collecting and selecting data, extracting data, assessing the relevance, and synthesizing
and discussing results (Priola, 2016). The data collection process in this study used the
keywords "organizational performance" and "organizational design". Then these
keywords are entered in the search application, namely, publish or perish. Article
searches were carried out on the Google Scholar database. Furthermore, the articles
retrieved were published in 2016 – 2022. Based on the search results, 988 articles were
obtained. The articles that have been collected are subject to an inclusion and exclusion
process, namely, selecting articles that meet the requirements submitted. The selected
articles are in English, included in peer-reviewed articles, included in qualitative and
quantitative articles, and Scopus indexed. After the article selection process, 18 articles
were obtained for the research objectives. Each article is then extracted and analyzed
to retrieve the required information. The next step is synthesis to summarize the data,
and a discussion is carried out so that the information needed to answer the research
questions is obtained.
The systematic literature review process can be explained as shown in Figure 1.
Based on the Google Scholar database, 988 articles were obtained. The initial step in
the systematic literature process is eliminating the title. Titles that do not contain
organizational design and organizational performance are eliminated. Then read the
abstract to find information on organizational design and performance. The next step
is to read the entire contents of the selected articles.The results obtained from reading
the entire paper are used as material for discussion in the discussion process.
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Figure 1. Systematic literature review process
RESULTS
In the results of this study, research data is presented based on the author's
name, year of publication, journal name and quartile.
Table 1. Characteristics of Research Data
No
Author
Journal name
Quartile
1
Oubrich et al., (2021)
Journal of Business Research
Q1
2
Yan et al., (2020)
International Journal of Production
Economics
Q1
3
Domínguez et al., (2020)
Review of Managerial Science
Q1
4
Kretschmer & Khashabi (2020)
California Management Review
Q1
5
Rovelli & Butticè (2020)
Journal of Industrial and Business
Economics
Q1
6
Baumstark (2020)
Industrial and Corporate Change
Q1
7
Bodolica & Spraggon (2020)
Journal of Management and Organization
Q2
8
Baporikar & Randa (2020)
International Journal of Service Science,
Management, Engineering, and
Technology
Q3
9
Englmaier et al., (2018)
Advances in Strategic Management
Q1
10
Clement & Puranam (2018)
Management Science
Q1
11
Adler & Heckscher (2018)
Research in the Sociology of Organizations
Q3
Articles review based on titles (n = 988)
Exclusion base on title:
Irrelevant topic (n= 961)
Non English Articles (=2)
Articles review based on abstracts(n = 25)
Exclusion based on abstract :
-No information founded about
arganizational design and
organizational performance (n= 5)
Exclusion based on full paper:
No information founded on the
relationship between arganizational
design and organizational performance
(n =2 )
Google Scholar (988)
Articles potential to be reviewed in full =20)
Articles review based on full paper (n = 18)
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12
Roh et al. (2017)
International Journal of Logistics
Management
Q1
13
Obloj & Zenger (2017)
Organization Science
Q1
14
Leyer et al. (2017)
International Journal of Production
Research
Q1
15
Mallets (2017)
Global Policy
Q1
16
Eriksson & Kadefors (2017)
International Journal of Project
Management
Q1
17
Graham (2016)
European Journal of International
Relations
Q1
18
Kornberger (2016)
Strategic Organization
Q1
Based on Table 1 above, it can be shown that 18 articles meet the requirements. These
articles met the inclusion and exclusion criteria. Articles that have been obtained are
indexed by Scopus. The articles obtained are included in reputable journals.
Furthermore, the articles were analyzed to obtain information to answer research
questions. Based on Table 1 above, the characteristics of the research data can be shown
in the figure below.
Figure 2. Number of Journals Based on Quartile
Based on Figure 2, it can be shown that the majority of selected journals are included
in reputable journals, namely Scopus-indexed Q1, Q2 and Q3. Fifteen journals in Q1
category, one journal in the Q2 category, and two journals in the Q3 category.
Discussion
At this stage, a discussion of the articles that have been selected is carried out. This
discussion intends to obtain important information about the relationship between
organizational design and performance and the relationship between organizational
design and other variables.
0
2
4
6
8
10
12
14
16
Q1 Q2 Q3
Amount
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Organizational Design and organizational performance
Organizational design has a strategic role in improving organizational
performance. The company changes its organizational design to get changes in the
organization. This result is supported by the study of (Yan et al., 2020), which explains
that companies are changing orientation, namely initially product-oriented, now
service-oriented. What has been done, of course, is to change the design of the
organization they have. This change continues with the success of the company's
service transformation. Meanwhile, Baporikar & Randa, (2020) explained in their
study that companies are improving governance through changes in organizational
design to improve company performance. In the study by Roh et al., (2017), Rovelli &
Butticè, 2020), it was explained the management and distribution within the company
are increasingly complex, so there is encouragement for managers to balance these
various sources. The effort that can be made is to make changes to the design of the
organization.
In their study, Englmaier et al., (2018) explained that organizational design
plays a vital role in explaining differential performance and outlining a set of ideas to
achieve better performance. This framework allows for more precise identification of
how organizational design can contribute to persistent differences in performance.
Clement & Puranam, (2018) explain that top-down and bottom-up forms of
organizational design can be an alternative in preparing organizational designs. Based
on the description above, the propositions that can be submitted are:
Proposition 1. Changes in organizational design will improve organizational
performance.
Organizational Design and Innovation
The results of the review that has been conducted found that changes made to
the organizational design have encouraged the emergence of creativity and innovation
in the organization. The study of Domínguez Escrig et al., (2020) has tried to describe
organizational structures that can influence organizations to innovate. The structure
can be seen from the effort made, namely making changes to the organizational design
to get an organizational structure that fits the organization's needs—added by Leyer
et al., (2017) that improvements to the organizational structure have driven changes in
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operational performance and innovation. These findings can serve as a guide for
managers and organizations as to which organizational design components should be
implemented to improve operations. The same thing is explained by Baumstark (2020)
that organizational design affects the success of company innovation. The market
competition requires organizations to excel in operational performance and
innovation. Bodolica & Spraggon (2020) investigated the knowledge-focused
organizational design of small high-tech innovators. Bodolica & Spraggon (2020)
explore the factors that explain variation in knowledge-focused designs across sample
firms. In their research, Adler & Heckscher (2018) explained that innovative businesses
depend on purely formal and informal organizational designs. Based on the
description above, the propositions that can be submitted are:
Proposition 2. Changes in organizational design will encourage innovation
Organizational Design and Digital Transformation
Digital transformation is often interpreted as using information and
communication technology in business activities, public government, and people's
lives. Digital Transformation is the radical use of technology to improve a company's
performance or reach (Anshin & Bobyleva, 2021). The use of these new technologies
can be seen such as social media, mobile use, the use of technology for analysis, and
the use of technology in order to support business performance, such as using
applications to build customer experiences, create new business models, streamline
the process of production and distribution of goods (Reis et al., 2018). Thus, digital
transformation is carried out to help government organizations or profit organizations
achieve their performance to satisfy the customers or communities they serve.
Based on the review results, it was found that the organizational design formed
was affected by changes in the business environment. Kretschmer & Khashabi (2020)
conducted a study that found that digital transformation can affect organizational
design by classifying and analyzing its effect on creating outputs in companies. In his
study, it was explained that organizations are forced to make changes in order to
compete with competitors. Digital transformation must continue in future-oriented
organizational life. For this reason, this digital transformation certainly requires
changes in organizational design so that later the organization can achieve its goals.
Based on the description above, the propositions that can be submitted are:
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Proposition 3. Digital transformation will drive organizational design changes.
Innovation and Organizational Performance
Innovation has proven critical to organizational success, and individual
innovation is vital to organizational-level innovation. Literature has defined
innovation a lot. Innovation is about making changes, but it must be considered more
than just making changes to be perceived differently (Shanker et al., 2017). Employees
with innovative and creative potential will practice innovation when they feel solid
organizational support (Suhag et al., 2017). More and more innovations that emerge
from various employees encourage organizations to be more flexible in adapting to an
increasingly competitive business environment. The positive relationship between
innovation and performance has been widely documented in the literature, so the role
of innovation in shaping organizational performance is highly expected.
Innovation has become a necessity in the organization. Organizations that
innovate will be able to survive in competition. As explained by (Imran et al., 2021),
innovation is pouring ideas that produce superior and competitive products. Many
ideas that were never predicted will emerge through innovation activities, so
innovation is born from ideas that can produce various commercial goods that benefit
the company. Through innovation, organizations can improve their performance
efficiency. Innovative organizations, in contrast to non-innovative organizations.
Innovative organizations are willing to present new technologies and services to meet
consumer demands (Alam, 2022). Many researchers have found that innovation
benefits organizational performance (Imran et al., 2021; Kornberger, 2016). In several
studies, it was found that these innovations resulted in superior organizational
performance. Based on the description above, the propositions that can be submitted
are:
Proposition 4. Innovation will improve organizational performance
CONCLUSION AND SUGGESTION
Based on the results of the review and discussion that has been done,
organizational design has a strategic role in improving organizational performance.
When optimization of organizational design is carried out, it directly impacts
improving organizational performance. Organizational performance can increase if
there is a willingness to change mindsets through optimization or changes in
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organizational design. Changes in organizational design can lead to innovations. This
innovation is needed by every organization in order to continue to grow. For this
reason, changes in organizational design are fundamental changes that can have an
impact on various aspects of organizational life. In addition, changes in organizational
design indicate that the organization is adaptive to changes in the business
environment. The existence of uncertain changes in the business environment requires
every organization to be ready to face these changes.
The research contribution that can be given is that there are research results that
provide an overview of the factors that influence organizational performance. The
resulting conceptual models and propositions about the relationship between
organizational design and performance can contribute to future researchers' thoughts.
Based on the results of the review that has been carried out, several variables can
improve organizational performance, including digital transformation, organizational
design and innovation. The organization needs these three variables if it wants to
change. For this reason, how much the contribution can be tested empirically in the
following study?
The weakness of this literature review lies in the articles or research data. The
data source is only from one database, namely Google Scholar, so many possible
studies in other databases still discuss organizational design and employee
performance. In addition, the articles reviewed are limited to references in English. So
the following research can increase the number of databases. Increasing the number of
databases provides an opportunity to increase the number of articles reviewed so that
discussions can be broader on various aspects within the organization.
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Jurnal Ekonika vol 8 (2) 2023 ISSN (Print) 2502-9304
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