Management Systems Fit for Organizational Performance
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MANAGEMENT SYSTEMS FIT FOR ORGANIZATIONAL PERFORMANCE by REY N. DIAZ B.S. University of Puerto Rico, 1983 M.S. University of Central Florida, 1994 A dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in the Department of Industrial Engineering and Management Systems in the College of Engineering and Computer Science at the University of Central Florida Orlando, Florida Spring Term 2007 Major Professor: Timothy G. Kotnour © 2007 Rey N. Diaz ii ABSTRACT The present study identifies the dimensions and variables using prior research within each of the constructs under the management systems, fit and, organizational strategy, structure, lifecycle and performance. The constructs from the research model were defined with a combination of direct, calculated and coded measures. Context analysis for each case categorized management systems design into either prescriptive or descriptive. The selected performance measures have been extensively investigated in the research fields associated with organizational management. The study uses the multiple case study design with cross-sectional data spanning from 1991 to 2005 and involving 19 aerospace companies in the United States. A priori hypothesized relationships between the constructs were tested with Mann-Whitney procedures for differences between mean ranks associated with organizational performance measures. The results from Mann-Whitney tests suggest that there exist significant differences in organizational performance from fit factors between a management system design and the organization. Present study defined organizational performance measures for analysis in terms of Return on Assets, Return on Equity and Return on Investment. When compared to a prescriptive management system design, a descriptive management system design was associated with higher levels of organizational iii performance. Cases with a fit state were found to score significantly higher than cases with unfit state suggesting that a correct fit state is associated with higher levels of organizational performance. A fit state was associated with higher levels of performance when each of the organizational factors for strategy, structure and lifecycle were aligned to management system design. Study results suggest equifinality as cases reached a particular fit state with differing combinations of fit factors. The study contributes to the field with interpretation of a fit model and key relationship between management systems and performance providing the base for future research efforts associated with management systems, organizational factors and the fit between them. iv To Iris, Alexander and Angelica v ACKNOWLEDGMENTS Without any doubt, the journey to complete this work has been an extremely long and challenging one. At times, the journey has been filled with obstacles that often seemed insurmountable. As I endured on this journey, I am forever indebted to many people who provided their help and support along the way. First and foremost, I thank the Lord as I reach this lifetime goal. I have truly been blessed with a wonderful family, friends, and teachers that provided to me abundant inspiration and support. My sincere gratitude is for the National Aeronautics and Space Administration at the Kennedy Space Center (KSC) for their support with the Kennedy Graduate Fellowship Program. A special thanks to Ms. Cheri Wynn, my KSC friends and co- workers for their support and encouragement. My gratitude to the Industrial Engineering and Management Systems faculty and staff for their professional work at the University of Central Florida with a special thanks to Ms. Joy Tatlonghari for her continued support in my scholastic journey. My most sincere gratitude is to Dr. Timothy Kotnour, my research committee chair, who provided endless support and outstanding guidance in the investigation process during periods of exceptional personal challenge. vi For their collective wisdom and advice, I offer my most sincere and heartfelt appreciation to my research committee: Dr. Ahmad Elshennawy, Dr. Linda Malone, Dr. Mansooreh Mollaghasemi and Dr. Debra Reinhart. Reflecting on my educational legacy, I must acknowledge that from early on my parents lay out the foundation for the pursuit of knowledge to my bothers, sisters, and me. I am grateful for their love and continued encouragement. My greatest and eternal appreciation is to my wife Iris for her encouragement, love and patience, and to our children, Alexander and Angelica, who endured and completed this journey with unconditional love and support. They give me the strength to go on especially at critical times when I felt that I could endure no more. Without them, I could not have completed this work. vii TABLE OF CONTENTS LIST OF FIGURES........................................................................................................xvi LIST OF TABLES..........................................................................................................xix LIST OF ABBREVIATIONS...........................................................................................xxi CHAPTER ONE: INTRODUCTION................................................................................. 1 1.1 Relevance of this Research................................................................................... 2 1.1.1 Relevance for Practitioners ............................................................................. 3 1.1.2 Relevance for Academics ............................................................................... 3 1.2 Research Question................................................................................................ 4 1.2.1 Research Objectives ....................................................................................... 4 1.2.2 Sub-Questions ................................................................................................ 5 1.3 Problem Statement................................................................................................ 6 1.4 Unit of Analysis...................................................................................................... 7 1.5 Conceptual Model.................................................................................................. 8 1.6 Research Hypotheses ......................................................................................... 12 1.7 Assumptions ........................................................................................................ 14 1.8 Limitations ........................................................................................................... 15 1.9 High-Level Methodology Description ................................................................... 17 viii 1.10 Definitions.......................................................................................................... 18 CHAPTER TWO: LITERATURE REVIEW .................................................................... 19 2.1 What is Fit for Organizational Performance? ....................................................... 19 2.1.1 Management System and Organization Fit – Brief History............................ 20 2.1.2 Fit Factors for Organizational Performance................................................... 26 2.1.3 Management and Organization ..................................................................... 30 2.1.4 Process Perspective ..................................................................................... 33 2.1.5 Performance Processes................................................................................ 35 2.1.6 Environmental Forces and Changes ............................................................. 37 2.2 What Influences Fit Between an Organization and the Management System? ... 46 2.2.1 Organizational Structure ............................................................................... 46 2.2.2 Organizational Structures and Strategies...................................................... 50 2.2.3 Organization Development and Lifecycle...................................................... 55 2.2.4 Information Flow............................................................................................ 59 2.2.5 Culture .......................................................................................................... 60 2.3 What is Organizational Performance? ................................................................. 63 2.3.1 Performance Control Theory ......................................................................... 63 2.3.2 Non-linear Relationships ............................................................................... 65 2.3.3 Organizational Performance.......................................................................... 69 2.4 What is a Management System?......................................................................... 76 2.4.1 Systems Thinking.......................................................................................... 77 2.4.2 Open Systems............................................................................................... 78 ix 2.4.3 Industrial Era Management Systems ............................................................ 80 2.4.4 Management Systems and Research Model................................................. 82 2.4.5 Criteria to Drive for Performance................................................................... 87 2.5. What are the Elements of a Management System? ..........................................