Jawn Lam

Divisional by region

Organizational StructuresDivisionalized forms13 min read

Geographic divisions each run the whole business in their territory, and a center coordinates across territories.

What it is

A regional structure cuts the organization by place. Under the chief executive, each territory head runs the whole business in an area and answers for its results. A center sets policy, allocates capital, and keeps some shared functions.

The regional form gives each territory head the whole business in one area

Select a unit or the letter to read it; the key above the drawing names the lines and the letter used. The label on one line from the center holds for every territory.

Reports toOStandardization of outputs

Policy and capitalCenterTerritoriesand staffWithin eachterritoryChief executiveand centerTerritorydivisionTerritorydivisionTerritorydivisionFunctions keptcentrallyEvery productin its areaEvery productin its areaEvery productin its areaBy placeO
Policy and capitalCenterTerritories and staffWithin each territoryCenterTerritoryTerritoryTerritoryCentralProductsProductsProductsBy placeO
Select a unit or a letter to read it. O, standardization of outputs: The results of the work are specified, such as targets or product dimensions, and the method is left to the unit.Chief executive and center. Layer: Center. Reports to no one. Sets policy, allocates capital, and holds strategic and financial control over the territories.Territory division. Layer: Territories and staff. Reports to Chief executive and center. By place. Its head runs the whole business in one area and answers for its results.Territory division. Layer: Territories and staff. Reports to Chief executive and center. By place. Runs to standard procedures within its territory under the center's policy; our judgment, from Mintzberg's (1980) account of divisions.Territory division. Layer: Territories and staff. Reports to Chief executive and center. By place. Holds its own boundary, and the structure is cut along the borders between places (our judgment, after Ashkenas, Ulrich, Jick, and Kerr 1995).Functions kept centrally. Layer: Territories and staff. Reports to Chief executive and center. Mintzberg (1980), citing Channon, says diversity only in region leads to an incomplete divisionalization, with critical functions, such as purchasing in a regional retail chain, concentrated at headquarters.Every product in its area. Layer: Within each territory. Reports to Territory division. The territory head owns every product in a place, instead of one product everywhere.Every product in its area. Layer: Within each territory. Reports to Territory division. Specialists sit inside each territory as well as at headquarters (our judgment).Every product in its area. Layer: Within each territory. Reports to Territory division. Territories share little work, so few lateral devices join them (our judgment).O, standardization of outputs. The results of the work are specified, such as targets or product dimensions, and the method is left to the unit.
The structure in words
  1. Center
    • Chief executive and center, reports to no one. Sets policy, allocates capital, and holds strategic and financial control over the territories.
  2. Territories and staff
    • Territory division, reports to Chief executive and center, grouped by place. Its head runs the whole business in one area and answers for its results.
    • Territory division, reports to Chief executive and center, grouped by place. Runs to standard procedures within its territory under the center's policy; our judgment, from Mintzberg's (1980) account of divisions.
    • Territory division, reports to Chief executive and center, grouped by place. Holds its own boundary, and the structure is cut along the borders between places (our judgment, after Ashkenas, Ulrich, Jick, and Kerr 1995).
    • Functions kept centrally, reports to Chief executive and center. Mintzberg (1980), citing Channon, says diversity only in region leads to an incomplete divisionalization, with critical functions, such as purchasing in a regional retail chain, concentrated at headquarters.
  3. Within each territory
    • Every product in its area, reports to Territory division. The territory head owns every product in a place, instead of one product everywhere.
    • Every product in its area, reports to Territory division. Specialists sit inside each territory as well as at headquarters (our judgment).
    • Every product in its area, reports to Territory division. Territories share little work, so few lateral devices join them (our judgment).
  • By place: coordinated by standardization of outputs.

Each territory runs every product in its area and answers for its results. The center judges the territories by standardized outputs, sets policy, allocates capital, and keeps some critical functions, such as purchasing in a regional retail chain.

Source: Chandler 1962, several independent case histories by a historian; Stopford and Wells 1972, a study of 187 U.S. multinational enterprises; Mintzberg 1980, a synthesis of earlier research, offering propositions without a new test; Ashkenas and colleagues 1995.

Dimension by dimension, it groups by place. Specialization is medium, and standardization and formalization span medium to high, both our judgment. Centralization is mixed, with critical functions such as purchasing kept at headquarters (Mintzberg 1980). Decision rights sit at limited vertical decentralization (Mintzberg's Type C). The prime coordinating mechanism is standardization of outputs. Layers and span are moderate; lateral mechanisms stop at hierarchy, rules, and goals; differentiation is moderate, with some integrating roles; exchange is bureaucracy; and boundaries are closed. Those five are our judgment.

Where the divisional form by region sits on the eleven dimensions

The filled segments are the form's levels; select a row for its reason and sources.

Select a dimension to read why the form sits there, and on what basis.Basis of grouping: Place. Basis: Theory. Geographic divisions each run the business in their territory. Sources: Chandler 1962; Stopford and Wells 1972.Specialization: Medium. Basis: Judgment. As in other divisionalized forms, specialists sit at the headquarters and inside each territory; judgment. Sources: Mintzberg 1980.Standardization and formalization: Medium to high. Basis: Judgment. Divisions run to standard procedures within territories, and the center sets policy; judgment, from Mintzberg's account of divisions. Sources: Mintzberg 1980.Centralization: Mixed. Basis: Theory. Divisions run the business in their territory under headquarters' strategic and financial control. Mintzberg, citing Channon, says diversity only in region leads to an incomplete divisionalization with certain critical functions, such as purchasing in a regional retail chain, concentrated at headquarters, which keeps some operating decisions central without taking most of them to the top. Sources: Mintzberg 1980.Layers and span of control: Moderate. Basis: Judgment. Territories report to one center, each with its own line below; judgment. Sources: Mintzberg 1980.Decision rights and the locus of authority: Limited vertical decentralization. Basis: Theory. Type C, vertical decentralization to the managers of market-based units, here territories, limited by the functions the center keeps. Sources: Mintzberg 1980.Prime coordinating mechanism: Standardization of outputs. Basis: Theory. Standardization of outputs by territory, with the center setting policy. Sources: Mintzberg 1980; Stopford and Wells 1972.Lateral mechanisms: Hierarchy, rules, and goals only. Basis: Judgment. Territories share little work, so few lateral devices are needed; judgment. Sources: Mintzberg 1980.Differentiation against integration: Moderate differentiation, some integrating roles. Basis: Judgment. Territories differ by local market and are joined by the center's policies and staff; judgment. Sources: Lawrence and Lorsch 1967a.Mode of exchange and control: Bureaucracy. Basis: Judgment. Territories are run through the center's policies inside one hierarchy; Williamson's capital-market reading fits product divisions, so this is judgment. Sources: Williamson 1975.Boundary permeability: Closed. Basis: Judgment. Each territory holds its own boundary and the borders between places are the cut lines of the structure; judgment. Sources: Ashkenas and colleagues 1995.

It groups by place and coordinates by standardization of outputs, with closed boundaries between territories. Four of the eleven levels rest on theory, none on evidence, and seven on judgment, and no row is contested.

Source: Chandler 1962, several independent case histories by a historian; Stopford and Wells 1972, a study of 187 U.S. multinational enterprises; Mintzberg 1980, a synthesis of earlier research, offering propositions without a new test; Lawrence and Lorsch 1967a, a multi-firm comparative field study; Williamson 1975; Ashkenas and colleagues 1995.

Where it came from

Alfred Chandler described it (1962); in his account, functional structures strained as firms spread into several product lines or regions. John Stopford and Louis Wells extended the account to multinationals (1972).

The schools of organization design and the forms' origins, 1900 to now

Each row is a school's era; each square under them is a form at its first year. Select a row or a square to read it; on a form's page, its own square and span are marked, with the schools that treat it.

1900192019401960198020002020Bureaucracy and its criticsClassical administrationHuman relations and System 4Transaction cost economicsCarnegie schoolSocio-technical systemsLabor-managed firmModularity and mirroringStrategy and structureContingency theoryFrench bureaucratic schoolJapanese-firm literatureScandinavian and DutchConfiguration theoryInformation processingLabor processStrategic choiceGerman codeterminationOrganizational economicsInstitutional theoryPopulation ecologyResource dependenceBusiness groupsScandinavian institutionalSocietal effectNetwork perspectiveComputational designNew-forms debateAlgorithmic managementForms by first yearDivisional by region, 1962 to 1972Now

The forms by first year

1900192019401960198020002020Divisional by region, 1962 to 1972Now

Schools that treat this form: Classical administration; Strategy and structure.

Select a school's row or a form's square to read it.Select a form's square to read it; open a school below.Bureaucracy and its critics1900s to 1950s, revived from the 1990sWhat it claimsWeber held that rational-legal authority exercised through an office hierarchy, written rules, trained officials, and promotion by qualification is technically superior in precision, speed, and reliability. Critics studied its unintended consequences, Michels's iron law sharpest.What it has shownMerton (1940) argued, with no test, that rules can turn from means into ends; case studies followed. The Aston group concluded that the type's dimensions vary independently, and Wagner's meta-analysis (2021) found that many of their interrelationships have weakened.Who disputes itHuman relations and System 4 sets the costs of impersonal rules to motivation and cooperation against the technical superiority Weber stresses.Bureaucracy and its critics in The Schools of Organization DesignClassical administration1910s to 1940s, and in German to the 1970sWhat it claimsThere are general principles of administration, among them division of work, unity of command, a scalar chain of authority, and a limited span of control, and a structure built to them will be efficient in most settings. Taylor added that planners should set work methods.What it has shownThe school offered reasoning and experience, not tests. Woodward (1965) found that the spans and levels of the more successful firms in her sample differed by production system, and Simon (1946) showed that the principles come in pairs that point in opposite directions.Who disputes itStructural contingency theory found that the structure of successful firms varies with technology and environment, where classical writers treat their principles as general.Classical administration in The Schools of Organization DesignHuman relations and System 41920s to 1960sWhat it claimsOutput depends on the social relations of work, the norms of informal groups, and the style of supervision as much as on formal design. Likert's System 4, overlapping work groups joined by linking-pin managers under participative management, outperforms authoritative systems.What it has shownThe founding evidence is the Hawthorne studies, which later reanalyses dispute (Carey 1967; Levitt and List 2011). Likert's support came largely from his own institute's surveys. Wagner (1994) found participation's effects on performance and satisfaction significant but small.Who disputes itLabor process and critical theory reads human relations as a technique of managerial control rather than a change in the distribution of power.Human relations and System 4 in The Schools of Organization DesignTransaction cost economics and the M-form hypothesis1937, then the 1970s to the presentWhat it claimsFirms exist, and are organized as they are, to economize on transaction costs. Hierarchy replaces the market when assets are specific, uncertainty is high, and exchange is frequent, and the multidivisional form should outperform the functional form in large, diversified firms.What it has shownArmour and Teece (1978) found, in United States petroleum firms from 1955 to 1973, a positive relationship between the multidivisional form and profitability while the form was spreading, but not once an equilibrium in organizational form was reached.Who disputes itThe network perspective on organizations: Granovetter argued that the theory undersocializes economic action, which is embedded in networks of personal relations that also produce trust and order.Transaction cost economics and the M-form hypothesis in The Schools of Organization DesignThe Carnegie school and the attention-based view1940s to the presentWhat it claimsPeople in organizations are boundedly rational, so structure matters because it sets the premises of their decisions and channels their attention: who sees which problems, which goals they pursue, and which routines they follow. Ocasio makes structure distribute attention.What it has shownMarch and Simon (1958) drew propositions from the existing literature, and Cyert and March (1963) added process models and simulations. Two studies show hierarchy shaping what is sent up as well as what is chosen (Reitzig and Maciejovsky 2015; Keum and See 2017).Who disputes itOrganizational economics: decision rights, authority, and complementarities models a principal and agents with defined objectives; the Carnegie school, firms as coalitions with unresolved goal conflict.The Carnegie school and the attention-based view in The Schools of Organization DesignSocio-technical systems1950s to 1980sWhat it claimsAn organization is a social system and a technical system that must be designed together. The same technology admits more than one way of organizing work, and groups that own a whole task and control its variances at the source perform better and are more satisfied.What it has shownTrist and Bamforth (1951) found that longwall mechanization broke up self-regulating work groups. A review of 134 experiments found them extremely successful overall, and Stewart (2006) linked team autonomy to performance; studies of socialist brigades and Volkswagen qualify it.Who disputes itLabor process and critical theory: Kelly argued that labor intensification, not joint optimization, accounts for what socio-technical redesign achieved, and that the part of pay incentives was seriously underestimated.Socio-technical systems in The Schools of Organization DesignThe economics of the labor-managed firm and of enterprise ownership1958 to the presentWhat it claimsA firm run by its workers behaves differently from one run for investors: Ward modeled the Yugoslav-style firm as maximizing income per worker. Hansmann argued that an ownership form's success depends on the balance between the costs of market contracting and of ownership.What it has shownBurdín (2014) found a 29 percent lower hazard of dissolution for Uruguayan worker-managed firms than for conventional ones, and Fakhfakh, Pérotin, and Gago (2012) found French labor-managed firms as productive or more so in every industry studied.Who disputes itOrganizational economics (Jensen and Meckling) contrasts the labor-managed firm, in which tradable residual claims are legally prohibited, with cooperatives and partnerships that arise out of voluntary contracting.The economics of the labor-managed firm and of enterprise ownership in The Schools of Organization DesignModularity and the mirroring hypothesis1960s to the presentWhat it claimsComplex systems are built of nearly decomposable parts, and an organization's structure tends to mirror the architecture of what it makes: modular products allow loosely coupled organizations, and tightly coupled products need tightly coupled teams. Conway's law runs in reverse.What it has shownColfer and Baldwin (2016) review the empirical studies and report both support and principled exceptions. Direct tests point both ways: MacCormack, Baldwin, and Rusnak (2012) found open source products more modular than their commercial pairs; dynamic components break the mirror.Who disputes itNo school in the record disputes it head on; it answers information processing, which meets the coordination load inside the organization; mirroring writers locate it in the product's architecture.Modularity and the mirroring hypothesis in The Schools of Organization DesignStrategy and structure1960s to 1980sWhat it claimsStructure follows strategy: firms that diversify by product or geography outgrow the centralized functional structure and, after a lag and usually a crisis, adopt divisions. Chandler drew this from the histories of DuPont, General Motors, Standard Oil of New Jersey, and Sears.What it has shownChandler (1962) is comparative business history of four firms set against a wider survey. Rumelt (1974) related diversification and structure to performance, and Egelhoff (1988), with 34 multinationals, found some of Stopford and Wells's relationships supported and others not.Who disputes itInstitutional theory: in Fligstein's model divisions spread with a product-related or unrelated strategy, presidents from sales or finance, and other firms in the industry changing; strategy was one of three.Strategy and structure in The Schools of Organization DesignStructural contingency theory1960s to the presentWhat it claimsThere is no one best structure. Performance depends on fit between structure and contingencies such as environment, technology, size, and strategy, on an open-system view of the organization. Drazin and Van de Ven separate fit as selection, interaction, and systems.What it has shownBurns and Stalker, Woodward, and the Aston group related structure to context; Drazin and Van de Ven (1985) supported selection and systems fit only. Pennings (1975) found that fit did not explain effectiveness; Schoonhoven (1981) found traditional hypotheses unsupported.Who disputes itStrategic choice: Child argued that contingency theory explains structure by the constraints of context and leaves out the political process by which power-holders choose strategic action, structural forms included.Structural contingency theory in The Schools of Organization DesignThe French bureaucratic school (strategic analysis)1960s to 1980sWhat it claimsA bureaucracy is a system of power relations organized around zones of uncertainty. Impersonal rules and centralization protect members from depending on one another, those who control uncertainties hold power, and, unable to correct its errors, it changes only through crisis.What it has shownLe phénomène bureaucratique (1963; English 1964) rests on two case studies, a clerical agency and a state industrial monopoly. L'acteur et le système (1977; English 1980) is theoretical.Who disputes itSocietal effect and comparative business systems: D'Iribarne argues that national logics of conduct, such as a French logic of honor, explain differences that Crozier attributed to power games.The French bureaucratic school (strategic analysis) in The Schools of Organization DesignThe Japanese-firm literature1960s to the presentWhat it claimsThe large Japanese firm coordinates operating decisions through horizontal information sharing among semi-autonomous shops and uses its ranking hierarchy mainly as an incentive scheme (Aoki). It creates knowledge through middle-up-down management (Nonaka and Takeuchi).What it has shownAoki (1986) is a formal model. Lincoln, Hanada, and McBride (1986) compared 51 Japanese and 55 United States manufacturing plants, and Nonaka and Takeuchi (1995) rest on case studies, chiefly of Japanese firms. Fruin (1994) found the enterprise system defined at three levels.Who disputes itLabor process and critical theory reads shop-floor delegation as control: Sewell and Wilkinson argue that just-in-time and total quality regimes delegate tactical responsibility while centralizing strategic control.The Japanese-firm literature in The Schools of Organization DesignThe Scandinavian and Dutch socio-technical schools1960s to 2000sWhat it claimsThe Scandinavian program sought democracy at work through field experiments with semi-autonomous groups, then through democratic dialogue. The Dutch school's design theory turns complex organizations with simple jobs into simple organizations with complex jobs.What it has shownEmery and Thorsrud reported field experiments in Norwegian industry; Gustavsen (1992) records that they spread less than hoped, his reason for turning to dialogue. Berggren studied work organization in the Swedish auto industry. The Dutch work rests on design cases and argument.Who disputes itThe Japanese-firm literature: defenders of the Toyota system hold that standardized work with employee participation learns faster; Berggren reports Swedish long-cycle plants matching a line plant on productivity.The Scandinavian and Dutch socio-technical schools in The Schools of Organization DesignConfiguration theory1970s to the presentWhat it claimsStructures cluster into a small number of internally coherent configurations whose elements reinforce one another, so organizations move between a few types in large jumps, not small steps. Mintzberg's five configurations each rest on one coordinating mechanism.What it has shownDoty, Glick, and Huber (1993) found that fit to Miles and Snow's ideal types predicted effectiveness while fit to Mintzberg's did not. A meta-analysis of 40 tests (Ketchen and colleagues 1997) found that configuration partly explains performance, more so with broad definitions.Who disputes itStructural contingency theory: Donaldson counters that most organizations sit at intermediate points on a continuum of fits, not in a few configurations, and that studies over time find mostly incremental change.Configuration theory in The Schools of Organization DesignInformation processing1970s to the presentWhat it claimsThe more uncertain the task, the more information must be processed during its execution. An organization either reduces that need, through slack resources or self-contained tasks, or raises its capacity, through vertical information systems or lateral relations up to the matrix.What it has shownGalbraith (1973, 1974) built the framework from cases and from Simon's theory of bounded rationality, and Tushman and Nadler (1978) set it out as an integrating concept for design. Daft and Lengel (1986) argued that structure must reduce equivocality as well as supply data.Who disputes itThe Carnegie school and the attention-based view: Ocasio holds that firm behavior results from how the firm channels and distributes attention, so structure governs where attention goes, not only how much is processed.Information processing in The Schools of Organization DesignLabor process and critical theory1970s to the presentWhat it claimsStructure is above all a system of control over labor. Braverman argued that management deskills work by separating conception from execution; Edwards traced a sequence from simple control by the boss to technical control through machines to bureaucratic control through rules.What it has shownHistorical and theoretical (Braverman 1974; Edwards 1979). Delbridge (1995), observing a Japanese-owned plant in England, found that just-in-time and total quality regimes combined the control of labor with management's economic goals more completely than piece rates had.Who disputes itBureaucracy and its critics: Adler argues that labor process theory ignores the progressive socialization of the labor process, which drives long-term skill upgrading, and disputes deskilling as the trend.Labor process and critical theory in The Schools of Organization DesignStrategic choice1970s to the presentWhat it claimsStructure is the outcome of choices by those with power in the organization, who decide on strategic action, including the structural form, the manipulation of environmental features, and the performance standards to be met. Context constrains but does not determine structure.What it has shownLargely conceptual: Child (1972) built the argument from gaps in contingency findings, and the empirical case rests mostly on the modest share of structural variance contingencies explain. A 2026 review of 42 studies finds upper echelons theory their main theoretical anchor.Who disputes itStructural contingency theory: Donaldson replies that organizations mostly adopt the structures their contingencies dictate, to avoid the loss of performance misfit brings, so choice over structure is at most limited.Strategic choice in The Schools of Organization DesignThe German codetermination literature1970s to the presentWhat it claimsWorks councils and employee board seats form a structural layer through which coordination can become negotiation between management and employees. Defenders argue that it supports long-term employment, training, and cooperation; critics, that it weakens shareholder control.What it has shownJäger, Schoefer, and Heining (2021) found board-level codetermination left wages unchanged and, if anything, raised capital formation. Jirjahn (2011) reports studies pointing to positive works council effects; a meta-analysis found codetermination laws tied to lower productivity.Who disputes itOrganizational economics (Gorton and Schmid) found that firms with equal employee and shareholder representation did worse for their shareholders than firms with one-third employee representation.The German codetermination literature in The Schools of Organization DesignOrganizational economics: decision rights, authority, and complementarities1976 to the presentWhat it claimsDesign is the joint choice of who holds which decision rights, how performance is measured, and how it is rewarded. Rights should be placed where the specific knowledge lies, formal authority differs from real authority, and practices are complements that pay off in clusters.What it has shownIchniowski, Shaw, and Prennushi (1997) found, on 36 steel finishing lines, that lines using a set of innovative work practices achieved substantially higher productivity, consistent with complementarities. Bloom and colleagues found more decentralization where trust was higher.Who disputes itGhoshal argued that management research has shaped managers' worldview with ideologically inspired amoral theories, built on a scientific model that excludes human intentionality and so denies moral considerations.Organizational economics: decision rights, authority, and complementarities in The Schools of Organization DesignInstitutional theory1977 to the presentWhat it claimsFormal structures are often adopted because they are legitimate in the organization's field, as rationalized myths, and then decoupled from the work done. Organizations in a field grow alike through coercive, mimetic, and normative isomorphism, whether or not it is efficient.What it has shownTolbert and Zucker (1983) found that city characteristics predicted early but not later adoption of civil service reform, which they read as institutionalization. Palmer, Jennings, and Zhou (1993) found support for institutional and economic accounts of late M-form adoption.Who disputes itStructural contingency theory: Kraatz and Zajac found little support for neoinstitutional predictions in 631 liberal arts colleges, which grew less alike; the change they studied was curricular, not structural.Institutional theory in The Schools of Organization DesignPopulation ecology1977 to the presentWhat it claimsOrganizations face strong structural inertia, because selection favors the reliability and accountability of stable structures. Change in a population's forms comes mainly from founding and failure, not adaptation, and changing core features resets the liability of newness.What it has shownAmburgey, Kelly, and Barnett (1993) found that the effects of change on the hazard of failure vary by type of change and over time, and that rates of change depend on how often and how recently an organization has changed. Carroll and Hannan (2000) set out the program's methods.Who disputes itFor structural contingency theory, Donaldson argues that ecology understates managers' capacity to adapt structure.Population ecology in The Schools of Organization DesignResource dependence1978 to the presentWhat it claimsOrganizations depend on outside parties for critical resources, and structure follows the management of that dependence: units that cope with critical dependencies gain power, and boundaries are redrawn through cooptation, joint ventures, and mergers to absorb constraint.What it has shownPfeffer and Salancik (1978) assembled studies of boards, mergers, and joint ventures. A meta-analysis of 157 tests (Drees and Heugens 2013) corroborated the main prediction: organizations meet resource dependencies with interorganizational arrangements that raise their autonomy.Who disputes itTransaction cost economics and the M-form hypothesis explains boundaries by efficiency; resource dependence, by power and constraint.Resource dependence in The Schools of Organization DesignThe business-groups literature1978 to the presentWhat it claimsGroups of legally independent firms bound by ownership and social ties are a durable form of their own, neither one firm nor a market. Where institutions function poorly, groups can benefit member firms and can destroy value; they are sometimes paragons, sometimes parasites.What it has shownKhanna and Palepu (2000) found that affiliates of the most diversified Indian groups outperformed unaffiliated firms. A meta-analysis of 141 studies (Carney and colleagues 2011) found that affiliation lowers performance in general, less so where institutions are underdeveloped.Who disputes itOrganizational economics: agency writers read pyramids and cross-holdings as devices that separate control from ownership; Almeida and Wolfenzon offer a financing rationale for pyramids instead.The business-groups literature in The Schools of Organization DesignScandinavian institutionalism1980s to the presentWhat it claimsIdeas of organizing do not diffuse unchanged; they travel and are translated as they are adopted, so a form taken up in one place is not the same form elsewhere. Organizations can also be built of organizations (meta-organizations), which behave differently.What it has shownA discussion paper by Czarniawska and Joerges (1995) contrasts the diffusion of ideas with their translation, drawing on examples such as Swedish municipal reform; the work on meta-organizations (Ahrne and Brunsson 2008) is conceptual.Who disputes itInstitutional theory can read the same processes, seen from a translocal view, as institutional isomorphism, though translation holds that each adopter modifies an idea, so an institution re-created elsewhere is new.Scandinavian institutionalism in The Schools of Organization DesignSocietal effect and comparative business systems1980s to the presentWhat it claimsFirms matched on size, technology, and industry differ systematically by country, because how a society educates, trains, recruits, and promotes its workforce, and its industrial relations, shape how work is divided and supervised, so structure is partly a national product.What it has shownMaurice, Sorge, and Warner (1980) compared closely matched manufacturing units in France, West Germany, and Great Britain and found more pervasive differences in their organization than usually recognized. Whitley (1999) set out a comparative account of business systems.Who disputes itStructural contingency theory stresses culture-free elements of structure; matched comparisons find nationally different shapes of organization.Societal effect and comparative business systems in The Schools of Organization DesignThe network perspective on organizations1985 to the presentWhat it claimsOrganizations and their members are nodes joined by ties, and the pattern of ties shapes what they can do. Economic action is embedded in networks of personal relations (Granovetter 1985), and network forms are a distinct form, not a hybrid of market and hierarchy (Powell 1990).What it has shownPodolny and Page (1998) review the research and find that network forms foster learning, confer status and legitimacy, bring economic benefits, help manage resource dependencies, and give employees considerable autonomy, and they ask for attention to networks' dysfunctions.Who disputes itTransaction cost economics: Williamson treats the hybrid as a third generic form between market and hierarchy; for Powell, network forms are a distinct form, not a mix of the two.The network perspective on organizations in The Schools of Organization DesignComputational organization design and search1990s to the presentWhat it claimsDesign choices interact, so design space is a rugged landscape with many local peaks, and structure affects how well an organization searches it. Decentralizing interdependent decisions can trap units on poor peaks; temporary decentralization, then reintegration, can help.What it has shownMostly simulation, with one field test: Csaszar (2012), with more than 150,000 stock-picking decisions by 609 mutual funds, found that decision-making structure affects the number of initiatives pursued and the omission and commission errors made.Who disputes itNo school in the record disputes it head on; it disputes structural contingency theory, whose bivariate fit, its simulations show, cannot capture how the best design depends on interactions among choices.Computational organization design and search in The Schools of Organization DesignThe new-forms debate1990s to the presentWhat it claimsOrganizations must solve four universal problems (dividing tasks, allocating them, providing rewards, and providing information), and a form is new when it solves them in new ways. Self-managing organizations radically decentralize authority; skeptics hold hierarchy reappears.What it has shownFoss (2003) traced the rise and partial reversal of Oticon's spaghetti organization to the problem of selective intervention. A meta-analysis of 54 studies of 13,914 teams (Greer and colleagues 2018) found that hierarchy within teams on net slightly lowers team performance.Who disputes itBureaucracy and its critics: removing formal structure leaves informal elites whose power is unaccountable (Freeman), and democratic and network organizations are much less hierarchy-free than their labels suggest.The new-forms debate in The Schools of Organization DesignThe algorithmic-management literature2015 to the presentWhat it claimsSoftware does much of the directing, evaluating, and disciplining that managers and rules once did. Kellogg, Valentine, and Christin (2020) call algorithmic control a new contested terrain; Puranam (2021) treats dividing decisions between people and machines as a design problem.What it has shownMostly qualitative field studies of gig work. Wood and colleagues (2019), with 107 interviews in six countries and 679 survey respondents, found that algorithmic management tends to give remote gig workers flexibility and autonomy, but also low pay, isolation, and overwork.Who disputes itLabor process and critical theory reads control at work as contested terrain; Kellogg, Valentine, and Christin take up that view but argue that algorithmic control is distinct from earlier forms.The algorithmic-management literature in The Schools of Organization DesignFunctional structureOrigin: 1911 to 1937.Family: Classical hierarchies.Line and staffOrigin: 1916 to 1943.Family: Classical hierarchies.Multidivisional (M-form) by productOrigin: 1920s practice; named and analyzed 1962 to 1975.Family: Divisionalized forms.Machine bureaucracyOrigin: 1922 (Weber); 1979 (Mintzberg).Family: Classical hierarchies.Divisional by customer or market segmentOrigin: 1937; 2005.Family: Divisionalized forms.Matrix organizationOrigin: 1950s to 1960s practice; analyzed 1971 to 1977.Family: Lateral and multidimensional forms.Co-determined organizationOrigin: 1951 to 1976 (the laws); 1984 to 2022 (the main studies).Family: Forms from other traditions.Socio-technical autonomous work groupsOrigin: 1951 to 1965.Family: Team-based and self-managing forms.Stratified hierarchy (requisite organization)Origin: 1951 to 1989.Family: Classical hierarchies.Cooperative organizationOrigin: 1958 to 1999.Family: Forms from other traditions.Linking-pin organization (System 4)Origin: 1961 to 1967.Family: Team-based and self-managing forms.Divisional by regionOrigin: 1962 to 1972.Family: Divisionalized forms.Adhocracy (innovative organization)Origin: 1968 to 1979.Family: Professional, project, and knowledge forms.J-form (the Japanese firm)Origin: 1968 to 1990.Family: Forms from other traditions.Professional bureaucracyOrigin: 1968 to 1979.Family: Professional, project, and knowledge forms.Holding company (H-form)Origin: 1972 to 1975; 1987.Family: Divisionalized forms.Ambidextrous organizationOrigin: 1976 to 2004.Family: Professional, project, and knowledge forms.Simple structureOrigin: 1979.Family: Classical hierarchies.Hybrid structureOrigin: 1980 to the present.Family: Lateral and multidimensional forms.Missionary (ideological) organizationOrigin: 1980 to 1989.Family: Ideological forms.Network, modular, and virtual organizationOrigin: 1986 to 1990.Family: Network and market-like forms.Transnational and multidimensional organizationOrigin: 1987 to 1989.Family: Lateral and multidimensional forms.Business group (keiretsu, chaebol, family house)Origin: 1988 to 2007.Family: Forms from other traditions.Shamrock organizationOrigin: 1988 to 1989.Family: Network and market-like forms.Federal organizationOrigin: 1989 to 1992.Family: Network and market-like forms.Self-managing organization (less-hierarchical forms)Origin: 1989 to 2017.Family: Team-based and self-managing forms.Boundaryless organizationOrigin: 1990 to 1995.Family: Network and market-like forms.Front-back organizationOrigin: 1990s to 2007.Family: Lateral and multidimensional forms.Professional partnership (P2 form)Origin: 1990.Family: Professional, project, and knowledge forms.The corporate center and shared servicesOrigin: 1991 to 2000.Family: Divisionalized forms.Internal market organizationOrigin: 1993 to 1994.Family: Network and market-like forms.Process (horizontal) organizationOrigin: 1993 to 1999.Family: Lateral and multidimensional forms.Cellular organizationOrigin: 1994 to 1997.Family: Network and market-like forms.Hypertext organizationOrigin: 1994 to 1995.Family: Forms from other traditions.Team-based organizationOrigin: 1995.Family: Team-based and self-managing forms.Project-based organizationOrigin: 2000 to 2006.Family: Professional, project, and knowledge forms.Agile at scaleOrigin: 2001 to 2016.Family: Contemporary and emerging forms.Distributed (all-remote) organizationOrigin: 2002 to 2021.Family: Contemporary and emerging forms.Open-source and community-based organizationOrigin: 2002 to 2007.Family: Contemporary and emerging forms.Algorithmically managed organizationOrigin: 2015 to 2020.Family: Contemporary and emerging forms.Team of teamsOrigin: 2015.Family: Team-based and self-managing forms.

The schools by first year

  1. Bureaucracy and its critics1900s to 1950s, revived from the 1990sWhat it claimsWeber held that rational-legal authority exercised through an office hierarchy, written rules, trained officials, and promotion by qualification is technically superior in precision, speed, and reliability. Critics studied its unintended consequences, Michels's iron law sharpest.What it has shownMerton (1940) argued, with no test, that rules can turn from means into ends; case studies followed. The Aston group concluded that the type's dimensions vary independently, and Wagner's meta-analysis (2021) found that many of their interrelationships have weakened.Who disputes itHuman relations and System 4 sets the costs of impersonal rules to motivation and cooperation against the technical superiority Weber stresses.
  2. Classical administration1910s to 1940s, and in German to the 1970sWhat it claimsThere are general principles of administration, among them division of work, unity of command, a scalar chain of authority, and a limited span of control, and a structure built to them will be efficient in most settings. Taylor added that planners should set work methods.What it has shownThe school offered reasoning and experience, not tests. Woodward (1965) found that the spans and levels of the more successful firms in her sample differed by production system, and Simon (1946) showed that the principles come in pairs that point in opposite directions.Who disputes itStructural contingency theory found that the structure of successful firms varies with technology and environment, where classical writers treat their principles as general.
  3. Human relations and System 41920s to 1960sWhat it claimsOutput depends on the social relations of work, the norms of informal groups, and the style of supervision as much as on formal design. Likert's System 4, overlapping work groups joined by linking-pin managers under participative management, outperforms authoritative systems.What it has shownThe founding evidence is the Hawthorne studies, which later reanalyses dispute (Carey 1967; Levitt and List 2011). Likert's support came largely from his own institute's surveys. Wagner (1994) found participation's effects on performance and satisfaction significant but small.Who disputes itLabor process and critical theory reads human relations as a technique of managerial control rather than a change in the distribution of power.
  4. Transaction cost economics and the M-form hypothesis1937, then the 1970s to the presentWhat it claimsFirms exist, and are organized as they are, to economize on transaction costs. Hierarchy replaces the market when assets are specific, uncertainty is high, and exchange is frequent, and the multidivisional form should outperform the functional form in large, diversified firms.What it has shownArmour and Teece (1978) found, in United States petroleum firms from 1955 to 1973, a positive relationship between the multidivisional form and profitability while the form was spreading, but not once an equilibrium in organizational form was reached.Who disputes itThe network perspective on organizations: Granovetter argued that the theory undersocializes economic action, which is embedded in networks of personal relations that also produce trust and order.
  5. The Carnegie school and the attention-based view1940s to the presentWhat it claimsPeople in organizations are boundedly rational, so structure matters because it sets the premises of their decisions and channels their attention: who sees which problems, which goals they pursue, and which routines they follow. Ocasio makes structure distribute attention.What it has shownMarch and Simon (1958) drew propositions from the existing literature, and Cyert and March (1963) added process models and simulations. Two studies show hierarchy shaping what is sent up as well as what is chosen (Reitzig and Maciejovsky 2015; Keum and See 2017).Who disputes itOrganizational economics: decision rights, authority, and complementarities models a principal and agents with defined objectives; the Carnegie school, firms as coalitions with unresolved goal conflict.
  6. Socio-technical systems1950s to 1980sWhat it claimsAn organization is a social system and a technical system that must be designed together. The same technology admits more than one way of organizing work, and groups that own a whole task and control its variances at the source perform better and are more satisfied.What it has shownTrist and Bamforth (1951) found that longwall mechanization broke up self-regulating work groups. A review of 134 experiments found them extremely successful overall, and Stewart (2006) linked team autonomy to performance; studies of socialist brigades and Volkswagen qualify it.Who disputes itLabor process and critical theory: Kelly argued that labor intensification, not joint optimization, accounts for what socio-technical redesign achieved, and that the part of pay incentives was seriously underestimated.
  7. The economics of the labor-managed firm and of enterprise ownership1958 to the presentWhat it claimsA firm run by its workers behaves differently from one run for investors: Ward modeled the Yugoslav-style firm as maximizing income per worker. Hansmann argued that an ownership form's success depends on the balance between the costs of market contracting and of ownership.What it has shownBurdín (2014) found a 29 percent lower hazard of dissolution for Uruguayan worker-managed firms than for conventional ones, and Fakhfakh, Pérotin, and Gago (2012) found French labor-managed firms as productive or more so in every industry studied.Who disputes itOrganizational economics (Jensen and Meckling) contrasts the labor-managed firm, in which tradable residual claims are legally prohibited, with cooperatives and partnerships that arise out of voluntary contracting.
  8. Modularity and the mirroring hypothesis1960s to the presentWhat it claimsComplex systems are built of nearly decomposable parts, and an organization's structure tends to mirror the architecture of what it makes: modular products allow loosely coupled organizations, and tightly coupled products need tightly coupled teams. Conway's law runs in reverse.What it has shownColfer and Baldwin (2016) review the empirical studies and report both support and principled exceptions. Direct tests point both ways: MacCormack, Baldwin, and Rusnak (2012) found open source products more modular than their commercial pairs; dynamic components break the mirror.Who disputes itNo school in the record disputes it head on; it answers information processing, which meets the coordination load inside the organization; mirroring writers locate it in the product's architecture.
  9. Strategy and structure1960s to 1980sWhat it claimsStructure follows strategy: firms that diversify by product or geography outgrow the centralized functional structure and, after a lag and usually a crisis, adopt divisions. Chandler drew this from the histories of DuPont, General Motors, Standard Oil of New Jersey, and Sears.What it has shownChandler (1962) is comparative business history of four firms set against a wider survey. Rumelt (1974) related diversification and structure to performance, and Egelhoff (1988), with 34 multinationals, found some of Stopford and Wells's relationships supported and others not.Who disputes itInstitutional theory: in Fligstein's model divisions spread with a product-related or unrelated strategy, presidents from sales or finance, and other firms in the industry changing; strategy was one of three.
  10. Structural contingency theory1960s to the presentWhat it claimsThere is no one best structure. Performance depends on fit between structure and contingencies such as environment, technology, size, and strategy, on an open-system view of the organization. Drazin and Van de Ven separate fit as selection, interaction, and systems.What it has shownBurns and Stalker, Woodward, and the Aston group related structure to context; Drazin and Van de Ven (1985) supported selection and systems fit only. Pennings (1975) found that fit did not explain effectiveness; Schoonhoven (1981) found traditional hypotheses unsupported.Who disputes itStrategic choice: Child argued that contingency theory explains structure by the constraints of context and leaves out the political process by which power-holders choose strategic action, structural forms included.
  11. The French bureaucratic school (strategic analysis)1960s to 1980sWhat it claimsA bureaucracy is a system of power relations organized around zones of uncertainty. Impersonal rules and centralization protect members from depending on one another, those who control uncertainties hold power, and, unable to correct its errors, it changes only through crisis.What it has shownLe phénomène bureaucratique (1963; English 1964) rests on two case studies, a clerical agency and a state industrial monopoly. L'acteur et le système (1977; English 1980) is theoretical.Who disputes itSocietal effect and comparative business systems: D'Iribarne argues that national logics of conduct, such as a French logic of honor, explain differences that Crozier attributed to power games.
  12. The Japanese-firm literature1960s to the presentWhat it claimsThe large Japanese firm coordinates operating decisions through horizontal information sharing among semi-autonomous shops and uses its ranking hierarchy mainly as an incentive scheme (Aoki). It creates knowledge through middle-up-down management (Nonaka and Takeuchi).What it has shownAoki (1986) is a formal model. Lincoln, Hanada, and McBride (1986) compared 51 Japanese and 55 United States manufacturing plants, and Nonaka and Takeuchi (1995) rest on case studies, chiefly of Japanese firms. Fruin (1994) found the enterprise system defined at three levels.Who disputes itLabor process and critical theory reads shop-floor delegation as control: Sewell and Wilkinson argue that just-in-time and total quality regimes delegate tactical responsibility while centralizing strategic control.
  13. The Scandinavian and Dutch socio-technical schools1960s to 2000sWhat it claimsThe Scandinavian program sought democracy at work through field experiments with semi-autonomous groups, then through democratic dialogue. The Dutch school's design theory turns complex organizations with simple jobs into simple organizations with complex jobs.What it has shownEmery and Thorsrud reported field experiments in Norwegian industry; Gustavsen (1992) records that they spread less than hoped, his reason for turning to dialogue. Berggren studied work organization in the Swedish auto industry. The Dutch work rests on design cases and argument.Who disputes itThe Japanese-firm literature: defenders of the Toyota system hold that standardized work with employee participation learns faster; Berggren reports Swedish long-cycle plants matching a line plant on productivity.
  14. Configuration theory1970s to the presentWhat it claimsStructures cluster into a small number of internally coherent configurations whose elements reinforce one another, so organizations move between a few types in large jumps, not small steps. Mintzberg's five configurations each rest on one coordinating mechanism.What it has shownDoty, Glick, and Huber (1993) found that fit to Miles and Snow's ideal types predicted effectiveness while fit to Mintzberg's did not. A meta-analysis of 40 tests (Ketchen and colleagues 1997) found that configuration partly explains performance, more so with broad definitions.Who disputes itStructural contingency theory: Donaldson counters that most organizations sit at intermediate points on a continuum of fits, not in a few configurations, and that studies over time find mostly incremental change.
  15. Information processing1970s to the presentWhat it claimsThe more uncertain the task, the more information must be processed during its execution. An organization either reduces that need, through slack resources or self-contained tasks, or raises its capacity, through vertical information systems or lateral relations up to the matrix.What it has shownGalbraith (1973, 1974) built the framework from cases and from Simon's theory of bounded rationality, and Tushman and Nadler (1978) set it out as an integrating concept for design. Daft and Lengel (1986) argued that structure must reduce equivocality as well as supply data.Who disputes itThe Carnegie school and the attention-based view: Ocasio holds that firm behavior results from how the firm channels and distributes attention, so structure governs where attention goes, not only how much is processed.
  16. Labor process and critical theory1970s to the presentWhat it claimsStructure is above all a system of control over labor. Braverman argued that management deskills work by separating conception from execution; Edwards traced a sequence from simple control by the boss to technical control through machines to bureaucratic control through rules.What it has shownHistorical and theoretical (Braverman 1974; Edwards 1979). Delbridge (1995), observing a Japanese-owned plant in England, found that just-in-time and total quality regimes combined the control of labor with management's economic goals more completely than piece rates had.Who disputes itBureaucracy and its critics: Adler argues that labor process theory ignores the progressive socialization of the labor process, which drives long-term skill upgrading, and disputes deskilling as the trend.
  17. Strategic choice1970s to the presentWhat it claimsStructure is the outcome of choices by those with power in the organization, who decide on strategic action, including the structural form, the manipulation of environmental features, and the performance standards to be met. Context constrains but does not determine structure.What it has shownLargely conceptual: Child (1972) built the argument from gaps in contingency findings, and the empirical case rests mostly on the modest share of structural variance contingencies explain. A 2026 review of 42 studies finds upper echelons theory their main theoretical anchor.Who disputes itStructural contingency theory: Donaldson replies that organizations mostly adopt the structures their contingencies dictate, to avoid the loss of performance misfit brings, so choice over structure is at most limited.
  18. The German codetermination literature1970s to the presentWhat it claimsWorks councils and employee board seats form a structural layer through which coordination can become negotiation between management and employees. Defenders argue that it supports long-term employment, training, and cooperation; critics, that it weakens shareholder control.What it has shownJäger, Schoefer, and Heining (2021) found board-level codetermination left wages unchanged and, if anything, raised capital formation. Jirjahn (2011) reports studies pointing to positive works council effects; a meta-analysis found codetermination laws tied to lower productivity.Who disputes itOrganizational economics (Gorton and Schmid) found that firms with equal employee and shareholder representation did worse for their shareholders than firms with one-third employee representation.
  19. Organizational economics: decision rights, authority, and complementarities1976 to the presentWhat it claimsDesign is the joint choice of who holds which decision rights, how performance is measured, and how it is rewarded. Rights should be placed where the specific knowledge lies, formal authority differs from real authority, and practices are complements that pay off in clusters.What it has shownIchniowski, Shaw, and Prennushi (1997) found, on 36 steel finishing lines, that lines using a set of innovative work practices achieved substantially higher productivity, consistent with complementarities. Bloom and colleagues found more decentralization where trust was higher.Who disputes itGhoshal argued that management research has shaped managers' worldview with ideologically inspired amoral theories, built on a scientific model that excludes human intentionality and so denies moral considerations.
  20. Institutional theory1977 to the presentWhat it claimsFormal structures are often adopted because they are legitimate in the organization's field, as rationalized myths, and then decoupled from the work done. Organizations in a field grow alike through coercive, mimetic, and normative isomorphism, whether or not it is efficient.What it has shownTolbert and Zucker (1983) found that city characteristics predicted early but not later adoption of civil service reform, which they read as institutionalization. Palmer, Jennings, and Zhou (1993) found support for institutional and economic accounts of late M-form adoption.Who disputes itStructural contingency theory: Kraatz and Zajac found little support for neoinstitutional predictions in 631 liberal arts colleges, which grew less alike; the change they studied was curricular, not structural.
  21. Population ecology1977 to the presentWhat it claimsOrganizations face strong structural inertia, because selection favors the reliability and accountability of stable structures. Change in a population's forms comes mainly from founding and failure, not adaptation, and changing core features resets the liability of newness.What it has shownAmburgey, Kelly, and Barnett (1993) found that the effects of change on the hazard of failure vary by type of change and over time, and that rates of change depend on how often and how recently an organization has changed. Carroll and Hannan (2000) set out the program's methods.Who disputes itFor structural contingency theory, Donaldson argues that ecology understates managers' capacity to adapt structure.
  22. Resource dependence1978 to the presentWhat it claimsOrganizations depend on outside parties for critical resources, and structure follows the management of that dependence: units that cope with critical dependencies gain power, and boundaries are redrawn through cooptation, joint ventures, and mergers to absorb constraint.What it has shownPfeffer and Salancik (1978) assembled studies of boards, mergers, and joint ventures. A meta-analysis of 157 tests (Drees and Heugens 2013) corroborated the main prediction: organizations meet resource dependencies with interorganizational arrangements that raise their autonomy.Who disputes itTransaction cost economics and the M-form hypothesis explains boundaries by efficiency; resource dependence, by power and constraint.
  23. The business-groups literature1978 to the presentWhat it claimsGroups of legally independent firms bound by ownership and social ties are a durable form of their own, neither one firm nor a market. Where institutions function poorly, groups can benefit member firms and can destroy value; they are sometimes paragons, sometimes parasites.What it has shownKhanna and Palepu (2000) found that affiliates of the most diversified Indian groups outperformed unaffiliated firms. A meta-analysis of 141 studies (Carney and colleagues 2011) found that affiliation lowers performance in general, less so where institutions are underdeveloped.Who disputes itOrganizational economics: agency writers read pyramids and cross-holdings as devices that separate control from ownership; Almeida and Wolfenzon offer a financing rationale for pyramids instead.
  24. Scandinavian institutionalism1980s to the presentWhat it claimsIdeas of organizing do not diffuse unchanged; they travel and are translated as they are adopted, so a form taken up in one place is not the same form elsewhere. Organizations can also be built of organizations (meta-organizations), which behave differently.What it has shownA discussion paper by Czarniawska and Joerges (1995) contrasts the diffusion of ideas with their translation, drawing on examples such as Swedish municipal reform; the work on meta-organizations (Ahrne and Brunsson 2008) is conceptual.Who disputes itInstitutional theory can read the same processes, seen from a translocal view, as institutional isomorphism, though translation holds that each adopter modifies an idea, so an institution re-created elsewhere is new.
  25. Societal effect and comparative business systems1980s to the presentWhat it claimsFirms matched on size, technology, and industry differ systematically by country, because how a society educates, trains, recruits, and promotes its workforce, and its industrial relations, shape how work is divided and supervised, so structure is partly a national product.What it has shownMaurice, Sorge, and Warner (1980) compared closely matched manufacturing units in France, West Germany, and Great Britain and found more pervasive differences in their organization than usually recognized. Whitley (1999) set out a comparative account of business systems.Who disputes itStructural contingency theory stresses culture-free elements of structure; matched comparisons find nationally different shapes of organization.
  26. The network perspective on organizations1985 to the presentWhat it claimsOrganizations and their members are nodes joined by ties, and the pattern of ties shapes what they can do. Economic action is embedded in networks of personal relations (Granovetter 1985), and network forms are a distinct form, not a hybrid of market and hierarchy (Powell 1990).What it has shownPodolny and Page (1998) review the research and find that network forms foster learning, confer status and legitimacy, bring economic benefits, help manage resource dependencies, and give employees considerable autonomy, and they ask for attention to networks' dysfunctions.Who disputes itTransaction cost economics: Williamson treats the hybrid as a third generic form between market and hierarchy; for Powell, network forms are a distinct form, not a mix of the two.
  27. Computational organization design and search1990s to the presentWhat it claimsDesign choices interact, so design space is a rugged landscape with many local peaks, and structure affects how well an organization searches it. Decentralizing interdependent decisions can trap units on poor peaks; temporary decentralization, then reintegration, can help.What it has shownMostly simulation, with one field test: Csaszar (2012), with more than 150,000 stock-picking decisions by 609 mutual funds, found that decision-making structure affects the number of initiatives pursued and the omission and commission errors made.Who disputes itNo school in the record disputes it head on; it disputes structural contingency theory, whose bivariate fit, its simulations show, cannot capture how the best design depends on interactions among choices.
  28. The new-forms debate1990s to the presentWhat it claimsOrganizations must solve four universal problems (dividing tasks, allocating them, providing rewards, and providing information), and a form is new when it solves them in new ways. Self-managing organizations radically decentralize authority; skeptics hold hierarchy reappears.What it has shownFoss (2003) traced the rise and partial reversal of Oticon's spaghetti organization to the problem of selective intervention. A meta-analysis of 54 studies of 13,914 teams (Greer and colleagues 2018) found that hierarchy within teams on net slightly lowers team performance.Who disputes itBureaucracy and its critics: removing formal structure leaves informal elites whose power is unaccountable (Freeman), and democratic and network organizations are much less hierarchy-free than their labels suggest.
  29. The algorithmic-management literature2015 to the presentWhat it claimsSoftware does much of the directing, evaluating, and disciplining that managers and rules once did. Kellogg, Valentine, and Christin (2020) call algorithmic control a new contested terrain; Puranam (2021) treats dividing decisions between people and machines as a design problem.What it has shownMostly qualitative field studies of gig work. Wood and colleagues (2019), with 107 interviews in six countries and 679 survey respondents, found that algorithmic management tends to give remote gig workers flexibility and autonomy, but also low pay, isolation, and overwork.Who disputes itLabor process and critical theory reads control at work as contested terrain; Kellogg, Valentine, and Christin take up that view but argue that algorithmic control is distinct from earlier forms.

The forms by first year

  1. Functional structure: 1911 to 1937
  2. Line and staff: 1916 to 1943
  3. Multidivisional (M-form) by product: 1920s practice; named and analyzed 1962 to 1975
  4. Machine bureaucracy: 1922 (Weber); 1979 (Mintzberg)
  5. Divisional by customer or market segment: 1937; 2005
  6. Matrix organization: 1950s to 1960s practice; analyzed 1971 to 1977
  7. Co-determined organization: 1951 to 1976 (the laws); 1984 to 2022 (the main studies)
  8. Socio-technical autonomous work groups: 1951 to 1965
  9. Stratified hierarchy (requisite organization): 1951 to 1989
  10. Cooperative organization: 1958 to 1999
  11. Linking-pin organization (System 4): 1961 to 1967
  12. Divisional by region: 1962 to 1972
  13. Adhocracy (innovative organization): 1968 to 1979
  14. J-form (the Japanese firm): 1968 to 1990
  15. Professional bureaucracy: 1968 to 1979
  16. Holding company (H-form): 1972 to 1975; 1987
  17. Ambidextrous organization: 1976 to 2004
  18. Simple structure: 1979
  19. Hybrid structure: 1980 to the present
  20. Missionary (ideological) organization: 1980 to 1989
  21. Network, modular, and virtual organization: 1986 to 1990
  22. Transnational and multidimensional organization: 1987 to 1989
  23. Business group (keiretsu, chaebol, family house): 1988 to 2007
  24. Shamrock organization: 1988 to 1989
  25. Federal organization: 1989 to 1992
  26. Self-managing organization (less-hierarchical forms): 1989 to 2017
  27. Boundaryless organization: 1990 to 1995
  28. Front-back organization: 1990s to 2007
  29. Professional partnership (P2 form): 1990
  30. The corporate center and shared services: 1991 to 2000
  31. Internal market organization: 1993 to 1994
  32. Process (horizontal) organization: 1993 to 1999
  33. Cellular organization: 1994 to 1997
  34. Hypertext organization: 1994 to 1995
  35. Team-based organization: 1995
  36. Project-based organization: 2000 to 2006
  37. Agile at scale: 2001 to 2016
  38. Distributed (all-remote) organization: 2002 to 2021
  39. Open-source and community-based organization: 2002 to 2007
  40. Algorithmically managed organization: 2015 to 2020
  41. Team of teams: 2015

Twenty-three of the 29 schools run to the present, and 16 of those began in the 1970s or later. The forms arrive in waves: 14 of the 41 first appear between 1985 and 1994.

Source: Fayol 1949; Weber 1978; Mayo 1933; Trist and Bamforth 1951, an interview-based field study in one industry; Burns and Stalker 1961, a field study of twenty firms; Mintzberg 1979; Child 1972a; Coase 1937; Meyer and Rowan 1977; Hannan and Freeman 1977; Galbraith 1973; Jensen and Meckling 1976; Crozier 1963; Emery and Thorsrud 1969; Yoshino 1968; Streeck 1984a; Kellogg and colleagues 2020, a review of earlier research through one theoretical lens, with no new data; Puranam and colleagues 2014, a conceptual argument; Chandler 1962, several independent case histories by a historian; Pfeffer and Salancik 1978; Simon 1946; Maurice and colleagues 1980, a comparison of matched factories in three countries; Levinthal 1997; Simon 1962; Braverman 1974; Hamilton and Biggart 1988, a comparison of three economies by scholars; Ward 1958; Czarniawska and Joerges 1995; Granovetter 1985.

It answered how to serve markets that differ by place, or are costly to reach from one center, while keeping one firm. No sector of origin is recorded, though governments organized field services by area (Smith 1967), and Gulick (1937) listed place among the bases of grouping; Simon (1946) answered that the bases conflict and give no guidance on which to choose.

Where it fits

Theory or our judgment underlies most ratings, several drawn from Burton and Obel's model, the most developed scholarly fit model.

The divisional form by region against the twelve contingency factors

Each factor at its three levels, Fits, Partial, or Strain; select a row for its reason, sources, and grade.

Select a factor to read its reason, sources, basis, and grade.Size. Area divisions that each run the whole business in a territory duplicate functions, so they need a firm large enough to have sizable operations in several places; the case is made for divisional forms in general, not tested on this one. Basis: Theory. Grade: conceptual only, no empirical test. Sources: Mintzberg 1980; Chandler 1962; Stopford and Wells 1972; Egelhoff 1988.Age. Area divisions usually come after a firm has built its home business and expanded abroad in stages. Basis: Judgment. Sources: Stopford and Wells 1972; Mintzberg 1980.Environmental uncertainty (unpredictability, dynamism). Self-contained territories absorb change locally, which the information-processing argument counts as a way to cope with more uncertainty. Basis: Judgment. Sources: Galbraith 1973; Burton and Obel 2004; Piekkari and colleagues 2010; Miller and Friesen 1984; Burton and colleagues 2015b. View 1: Stable fits, Shifting fits, Unpredictable fits. Self-contained territories absorb change locally, which the information-processing argument counts as a way to cope with more uncertainty. Sources: Galbraith 1973; Piekkari and colleagues 2010. View 2: Stable fits, Shifting partial, Unpredictable strain. Mintzberg places every divisionalized form, territorial divisions included, in environments neither very complex nor very dynamic, the conditions it shares with the machine bureaucracy. Sources: Miller and Friesen 1984. View 3: Stable strain, Shifting partial, Unpredictable fits. Burton, Obel, and Håkonsson pair the divisional configuration with the locally stormy environment, which is highly unpredictable, so divisions facing a calm or varied environment sit in different columns of their Table 4.1, which they call a misfit. Sources: Burton and colleagues 2015b.Environmental complexity. Works disagree: the fit model's rules call for decentralized units where a complex environment splits by place, while Mintzberg places the divisionalized form in environments neither very complex nor very dynamic. Basis: Theory. Grade: conceptual only, no empirical test. Sources: Burton and Obel 2004; Mintzberg 1980; Miller and Friesen 1984; Pennings 1975. View 1: Simple partial, Moderate partial, Complex fits. Territories that each face a different mix of conditions can be read locally; where the environment is simple, place-based units add little beyond what geography alone requires. Sources: Burton and Obel 2004. View 2: Simple fits, Moderate partial, Complex strain. Every divisionalized form, territorial divisions included, works best in environments neither very complex nor very dynamic, the same environments that favor the machine bureaucracy. Sources: Mintzberg 1980; Miller and Friesen 1984.Munificence and hostility. Territorial divisions can cut costs locally under threat, but threat tends to constrict control toward the top, while Burton and Obel lower centralization under high hostility and raise it only under extreme hostility, so the works read point both ways. Basis: Judgment. Sources: Burton and Obel 2004; Staw and colleagues 1981.Diversity of products and markets. Works disagree: area divisions go with one product line sold in many places in the traditional model and its tests, while a performance test found strategy-structure fit making no difference for service multinationals. Basis: Evidence. Grade: a multi-firm empirical study or several independent case studies by scholars. Sources: Stopford and Wells 1972; Wolf and Egelhoff 2002; Burton and Obel 2004; Habib and Victor 1991. View 1: Single or dominant business fits, Related diversification partial, Unrelated diversification strain. Area divisions suit firms that sell one product line in many places; firms with many unrelated products organize by product instead. Sources: Stopford and Wells 1972; Wolf and Egelhoff 2002; Burton and Obel 2004. View 2: Single or dominant business partial, Related diversification partial, Unrelated diversification partial. Multinationals chose the structures the fit prescription calls for, but in the performance test fit had no effect on service multinationals and mixed effects on manufacturers. Sources: Habib and Victor 1991.Strategy type. Burton and Obel's rules name divisional configurations in general, for the analyzer in 2004 and for the prospector in the later book (2015); whether regional divisions in particular suit one strategy type is not settled by any work read. Basis: Judgment. Sources: Burton and Obel 2004; Miles and Snow 1978; Burton and colleagues 2015b. View 1: Defender (exploitation) strain, Analyzer (exploitation and exploration) fits, Prospector (exploration) partial. Burton and Obel's 2004 rule gives divisional configurations in general to the analyzer, with and without innovation, and leaves them off the prospector's list. Sources: Burton and Obel 2004. View 2: Defender (exploitation) strain, Analyzer (exploitation and exploration) partial, Prospector (exploration) fits. The later book (2015) fits the divisional configuration to the prospector and the matrix to the analyzer, and its rule, like the 2004 one, speaks of divisional configurations in general. Sources: Burton and colleagues 2015b.Technology and routineness. Each region runs its own operations, so routineness bears on how a region organizes its work, not on cutting the firm by territory. Basis: Judgment. Sources: Hickson and colleagues 1969; Williamson 1975.Interdependence. Territories that only share capital and brand suit the form; flows between regions need plans or prices, and work that must be adjusted back and forth across regions breaks the self-contained unit. Basis: Theory. Grade: conceptual only, no empirical test. Sources: Burton and Obel 2004; Thompson 1967; Zhou 2013. View 1: Pooled fits, Sequential partial, Reciprocal strain. Territories that only share capital and brand suit the form; flows between regions need plans or prices, and work that must be adjusted back and forth across regions breaks the self-contained unit. Sources: Burton and Obel 2004; Thompson 1967. View 2: Pooled fits, Sequential fits, Reciprocal partial. Divisionalization in general rose with the interdependence among tasks and fell only as tasks became less decomposable, and Thompson has the earlier of two sequentially interdependent divisions sell its output to the later one, so interdependence as such does not break divisions; only work that cannot be decomposed does. Sources: Zhou 2013; Thompson 1967.Knowledge intensity and professionalization. Territorial divisions are coordinated by performance standards like any divisionalized form, which push them toward machine bureaucracy; professional work whose output resists measurement sits less well under that control. Basis: Theory. Grade: conceptual only, no empirical test. Sources: Mintzberg 1980.Global integration pressure. Area divisions run each territory as a whole business, which suits weak pressure to integrate across countries, Bartlett and Ghoshal's multinational type; strong integration pressure cuts across the territorial lines this form draws. Basis: Judgment. Sources: Stopford and Wells 1972; Prahalad and Doz 1987; Habib and Victor 1991; Egelhoff 1988; Devinney and colleagues 2000. View 1: Low partial, Moderate partial, High strain. Area divisions run each territory as a whole business; strong pressure to integrate activities across countries cuts across the territorial lines this form draws. Sources: Stopford and Wells 1972; Prahalad and Doz 1987. View 2: Low partial, Moderate partial, High partial. Multinationals chose structures consistent with the strategy and structure prescription, yet that fit had no effect on service multinationals' performance and mixed effects for manufacturers, only some of Stopford and Wells's relationships held on re-examination, and global firms can meet these pressures with a variety of configurations. Sources: Habib and Victor 1991; Egelhoff 1988; Devinney and colleagues 2000.Local responsiveness pressure. Area divisions own every product in a place, so each can adapt offerings and operations to its countries, Bartlett and Ghoshal's multinational type; when offerings need little adaptation, cutting the firm by territory has to be justified on other grounds, such as the cost of reaching distant markets. Basis: Judgment. Sources: Stopford and Wells 1972; Prahalad and Doz 1987; Mintzberg 1980; Habib and Victor 1991; Egelhoff 1988; Devinney and colleagues 2000. View 1: Low partial, Moderate partial, High fits. Area divisions own every product in a place, so each can adapt offerings and operations to its countries; when offerings need little adaptation, cutting the firm by territory has to be justified on other grounds, such as the cost of reaching distant markets. Sources: Stopford and Wells 1972; Prahalad and Doz 1987. View 2: Low partial, Moderate partial, High partial. Diversity only in region leads to an incomplete divisionalization with critical functions kept at headquarters, the strategy and structure fit had no effect on service multinationals' performance and mixed effects for manufacturers, and firms can meet these pressures with a variety of configurations. Sources: Mintzberg 1980; Habib and Victor 1991; Egelhoff 1988; Devinney and colleagues 2000.

Across the 36 settings the first view reads Fits at 13, Partial at 18, and Strain at 5, the strains at a small size, unrelated diversification, a defender strategy, reciprocal interdependence, and high global integration pressure. Seven of the twelve cells are contested, and seven rest on judgment.

Source: Mintzberg 1980, a synthesis of earlier research, offering propositions without a new test; Chandler 1962, several independent case histories by a historian; Stopford and Wells 1972, a study of 187 U.S. multinational enterprises; Egelhoff 1988, a multi-firm study of multinationals; Galbraith 1973; Burton and Obel 2004; Piekkari and colleagues 2010, one longitudinal case study; Miller and Friesen 1984; Burton and colleagues 2015b; Pennings 1975, a quantitative field test of the structural-contingency model; Staw and colleagues 1981, a review of earlier evidence at several levels, with no new data; Wolf and Egelhoff 2002, a statistical study of 95 German firms; Habib and Victor 1991, a multi-firm study of multinationals; Miles and Snow 1978; Hickson and colleagues 1969, a multi-organization comparative survey; Williamson 1975; Thompson 1967; Zhou 2013, an archival study of many US manufacturers over 11 years; Prahalad and Doz 1987; Devinney and colleagues 2000, a formal model with no new data.

Your own situation against the divisional form by region

Set any factor to outline its cell in the strip above; the lines under the switches give the counts, the form's place among the 41, and the misfit rules that fire.

Size
Age
Environmental uncertainty (unpredictability, dynamism)
Environmental complexity
Munificence and hostility
Diversity of products and markets
Strategy type
Technology and routineness
Interdependence
Knowledge intensity and professionalization
Global integration pressure
Local responsiveness pressure

Set: 0 of 12 factors. Fits on 0, Partial on 0, Strain on 0, Contested on 0.

Its place in the explorer's rankingEvery factor is on Any: all 41 forms tie, and the explorer lists them alphabetically.1st of 411st of 41, tied with one other1st of 41, tied with 0 othersSunk by a misfit rule: 1st of 41Sunk by a misfit rule: 1st of 41, tied with one otherSunk by a misfit rule: 1st of 41, tied with 0 others

  • Flagged (its sources disagree): A prospector bound by heavy rules. Disputed: Burton and Obel 2004; against it, Sine and colleagues 2006; Adler and Borys 1996.
  • Sinks the form: Self-contained divisions for a defender. Source: Burton and colleagues 2015b; Burton and colleagues 2020a; Burton and Obel 2004.
  • Flagged (its sources disagree): Self-contained divisions for an analyzer. Disputed: Burton and colleagues 2015b; against it, Burton and Obel 2004.
  • Flagged (its sources disagree): A small organization with a large one's rules. Disputed: Burton and Obel 2004; against it, Sine and colleagues 2006.
  • Flagged (its sources disagree): Nonroutine work bound by procedures. Disputed: Burton and Obel 2004; against it, Adler and colleagues 1999; Adler and Borys 1996; against it, Hickson and colleagues 1969; Child and Mansfield 1972.
  • Flagged (its sources disagree): Divisions whose work cannot be separated. Disputed: Burton and colleagues 2015b; Burton and Obel 2004; against it, Hill and colleagues 1992; Siggelkow and Levinthal 2003.
  • Flagged (its sources disagree): Heavy rules in an unpredictable environment. Disputed: Burton and Obel 2004; against it, Sine and colleagues 2006; Bigley and Roberts 2001; Adler and Borys 1996.
  • Flagged (its sources disagree): Reactor: a defender's structure kept after the environment changed. Disputed: Miles and Snow 1978; Burton and Obel 2004; against it, Sine and colleagues 2006; Bigley and Roberts 2001; Adler and Borys 1996.

Ranking rule: by count of Fits on the factors the reader has set, then fewest Strains, then alphabetical; a fired misfit rule that no source disputes sinks the form to the bottom when every level of the form's profile meets it, a disputed one, or one that meets the form only through one end of a spanned level, one view of a contested profile cell, or one part of a two-part form, is flagged on the row (with both views where it is disputed), and a misfit between two of the reader's own settings is shown once above the list; a contested cell counts only where its views agree at the reader's level, and otherwise shows as Contested; factors on "Any" count for nothing; with every factor on "Any" the list is alphabetical and says so.

Open these settings in the explorer

The misfit rules that can fire for this form

  • A prospector bound by heavy rules fires when Strategy type at Prospector (exploration): flagged (its sources disagree). Disputed: Burton and Obel 2004; against it, Sine and colleagues 2006; Adler and Borys 1996.
  • Self-contained divisions for a defender fires when Strategy type at Defender (exploitation): sinks the form. Source: Burton and colleagues 2015b; Burton and colleagues 2020a; Burton and Obel 2004.
  • Self-contained divisions for an analyzer fires when Strategy type at Analyzer (exploitation and exploration): flagged (its sources disagree). Disputed: Burton and colleagues 2015b; against it, Burton and Obel 2004.
  • A small organization with a large one's rules fires when Size at Small: flagged (its sources disagree). Disputed: Burton and Obel 2004; against it, Sine and colleagues 2006.
  • Nonroutine work bound by procedures fires when Technology and routineness at Nonroutine: flagged (its sources disagree). Disputed: Burton and Obel 2004; against it, Adler and colleagues 1999; Adler and Borys 1996; against it, Hickson and colleagues 1969; Child and Mansfield 1972.
  • Divisions whose work cannot be separated fires when Interdependence at Reciprocal: flagged (its sources disagree). Disputed: Burton and colleagues 2015b; Burton and Obel 2004; against it, Hill and colleagues 1992; Siggelkow and Levinthal 2003.
  • Heavy rules in an unpredictable environment fires when Environmental uncertainty (unpredictability, dynamism) at Unpredictable: flagged (its sources disagree). Disputed: Burton and Obel 2004; against it, Sine and colleagues 2006; Bigley and Roberts 2001; Adler and Borys 1996.
  • Reactor: a defender's structure kept after the environment changed fires when Strategy type at Defender (exploitation) and Environmental uncertainty (unpredictability, dynamism) at Unpredictable: flagged (its sources disagree). Disputed: Miles and Snow 1978; Burton and Obel 2004; against it, Sine and colleagues 2006; Bigley and Roberts 2001; Adler and Borys 1996.

Eight of the 39 contingency misfit rules can fire for the regional form, and one sinks it: self-contained divisions for a defender. The other seven only flag it, two because a source disputes them and five because they meet only the high end of its formalization span.

Source: Burton and Obel 2004; Burton and colleagues 2020a.

  • Size. Strain small, partial medium, fits large, as theory: each territory duplicates functions, so the firm needs sizable operations in several places (Mintzberg 1980; Chandler 1962; Stopford and Wells 1972). Untested on this form.
  • Age. Partial young, fits established and old; our judgment, since area divisions follow a home business and staged expansion (Stopford and Wells 1972).
  • Environmental uncertainty. Contested. View one, our judgment: fits throughout, since self-contained units are one of Galbraith's (1973) ways to cope with uncertainty; one case study (Piekkari, Nell, and Ghauri 2010) found regional management adapting. Mintzberg (in Miller and Friesen 1984): fits stable, partial shifting, strain unpredictable, since divisionalized forms suit environments not very dynamic. Burton, Obel, and Håkonsson (2015): strain stable, partial shifting, fits unpredictable, since their table pairs divisions with a locally stormy, unpredictable environment. Both middle levels are our reading.
  • Environmental complexity. Contested. Burton and Obel (2004): partial simple and moderate, fits complex, since a complex environment that can be segmented calls for decentralized units. Mintzberg (1980; in Miller and Friesen 1984): fits simple, partial moderate, strain complex, since divisionalized forms suit environments neither very complex nor very dynamic. A limit on both: Pennings (1975), a quantitative field test of the structural-contingency model, found environment-structure fit did not explain effectiveness; Donaldson (2001) blames such failures on method.
  • Munificence and hostility. Partial throughout, our judgment: threat tends to constrict control toward the top (Staw, Sandelands, and Dutton 1981, a review of earlier evidence at several levels, with no new data), while Burton and Obel (2004) lower centralization under high hostility, raising it only under extreme hostility. Cameron, Kim, and Whetten (1987), a six-year study of 334 institutions of higher education, found centralization affected by turbulence but not by decline.
  • Diversity. Contested, an evidence cell. View one (Stopford and Wells's 1972 model, which pairs area divisions with one product line sold in many places; Wolf and Egelhoff 2002, a statistical study of 95 German firms; Burton and Obel 2004, offered with caution): fits a single business, partial related, strain unrelated. View two (Habib and Victor 1991, a multi-firm study of 144 United States multinationals): partial throughout, since fit did not affect service firms' performance and had mixed effects for manufacturers.
  • Strategy. Contested, our judgment from Burton and Obel's rules for divisions in general. Both books give the defender a functional configuration; their 2004 book gives divisions to the analyzer (strain, fits, partial), their 2015 book with Håkonsson to the prospector (strain, partial, fits).
  • Technology. Partial throughout, our judgment: routineness shapes how a region works, not the territorial cut; Hickson, Pugh, and Pheysey (1969), a multi-organization comparative survey, found technology unrelated to the wider administrative structure of larger organizations.
  • Interdependence. Contested, both theory. Burton and Obel (2004) and Thompson (1967): fits pooled, partial sequential, strain reciprocal. Zhou (2013), an archival study of many United States manufacturers over 11 years, with Thompson: fits pooled and sequential, partial reciprocal, since divisionalization rose with interdependence and fell only as tasks became less decomposable.
  • Knowledge intensity. Fits low and moderate, partial high, as theory: Mintzberg (1980) argues performance standards push divisions toward machine bureaucracy, where professional work whose output resists measurement sits less well. Doty, Glick, and Huber (1993), a quantitative test across a sample of organizations, found no support for his configurations' effectiveness claim, but Ketchen and colleagues (1997), a meta-analysis of 40 tests, many of strategy types, not structures, found configurations partly explain performance on average, and Krabberød (2015) argues the Doty test has not been shown to be exhaustive.
  • Global integration pressure. Contested. Our reading of Stopford and Wells (1972) and Prahalad and Doz (1987): partial low and moderate, strain high, since integration across countries cuts across territorial lines. The other view (Habib and Victor 1991; Egelhoff 1988, a multi-firm study of 34 multinationals; Devinney, Midgley, and Venaik 2000, a formal model): partial throughout.
  • Local responsiveness pressure. Contested. Our reading, on the same premises: partial low and moderate, fits high, since each area can adapt to its countries. The other view, partial throughout, adds Mintzberg's (1980) incomplete divisionalization to the same three works.

What it does well

One manager adapts everything in a place to local markets. Self-contained territories absorb local change without sending it up (Galbraith 1973). Both are one side of contested fit ratings.

Where country managers say head-office products and policies do not fit their markets, the symptom view offers it (theory, from Prahalad and Doz 1987). One view adds the transnational; the other offers this form alone, on Leong and Tan (1993), Devinney and colleagues (2000), and Meyer and Su (2015), a survey of subsidiaries in two emerging economies, who also found a transnational strategy helped subsidiaries that were wholly owned, not acquired, and highly export oriented.

What it costs

Every territory carries its own functions, so the firm pays for them several times.

No one below the top owns a product or customer that crosses territories (our reading of Stopford and Wells 1972 and Prahalad and Doz 1987, one side of a contested cell).

How it fails

How the divisional form by region fails, and the coordination failures behind it

The entry's failure modes at the left, each tied to the Coordination Failures patterns it names at the right; a pattern links its entry there.

Jurisdictional gap or overlapRegulator overloadDiffused responsibilitySiloed knowledge
Jurisdictional gap or overlapRegulator overloadDiffused responsibilitySiloed knowledge

How many ties the failure has. Highest: Territories and head-office functions claim the same decisionsWork that crosses regions overloads the topNo one owns the product across territoriesWhat one territory learns stays thereJurisdictional gap or overlapRegulator overloadDiffused responsibilitySiloed knowledge

Select a failure to read its place in the network.Territories and head-office functions claim the same decisions. Degree 1Work that crosses regions overloads the top. Degree 1No one owns the product across territories. Degree 1What one territory learns stays there. Degree 1Jurisdictional gap or overlap. Degree 1Regulator overload. Degree 1Diffused responsibility. Degree 1Siloed knowledge. Degree 1
FailureDegree
Territories and head-office functions claim the same decisions1
Work that crosses regions overloads the top1
No one owns the product across territories1
What one territory learns stays there1
Jurisdictional gap or overlap1
Regulator overload1
Diffused responsibility1
Siloed knowledge1

Four failure modes name four patterns, and no pattern is named by more than one.

Source: Chandler 1962, several independent case histories by a historian; Burton and colleagues 2015b; Burton and Obel 2004; Hill and colleagues 1992, a survey of many firms; Siggelkow and Levinthal 2003, a computer simulation, with no field data; Stopford and Wells 1972, a study of 187 U.S. multinational enterprises; Prahalad and Doz 1987; Habib and Victor 1991, a multi-firm study of multinationals; Egelhoff 1988, a multi-firm study of multinationals; Devinney and colleagues 2000, a formal model with no new data; Ashkenas and colleagues 1995; Asakawa 2020, an empirical comparison of R&D subsidiaries across multinationals; Knott and Turner 2019, a quantitative study of many firms in one industry, with a formal model.

Territories and head-office functions claim the same decisions. At Sears, territories set inside the functional organization failed over unclear lines of authority (Chandler 1962, one historical case study): a jurisdictional gap or overlap.

Work that crosses regions overloads the top. When territories' work feeds back and forth, the executive above fills with coordinating detail (Burton, Obel, and Håkonsson 2015): regulator overload. Burton and Obel (2004) call indivisible technology a misfit with divisions. Contested: from Hill, Hitt, and Hoskisson (1992), a survey of many firms, and Siggelkow and Levinthal (2003), a computer simulation, divisions with linked work can fit when run for cooperation or as a temporary phase.

No one owns the product across territories. A product spanning regions has an owner only at the top (diffused responsibility); our reading, as above. Contested: on Habib and Victor (1991), Egelhoff (1988), and Devinney and colleagues (2000), integration pressure strains the form at no level.

What one territory learns stays there. Each territory keeps its own boundary (siloed knowledge); our judgment from the profile's closed boundaries (Ashkenas, Ulrich, Jick, and Kerr 1995). Asakawa (2020) bears on it at regional headquarters. Knott and Turner (2019) point both ways: in banking, knowledge growth rose with the number of units and their knowledge heterogeneity, and rose then fell with their geographic distance.

One misfit rule fires undisputed: divisions for a defender, which both Burton and Obel books give a functional form, the 2015 one because a defender needs close coordination among units. In a quantitative study of 224 Danish firms, Burton, Lauridsen, and Obel (2002) found lower return on assets with misfits but tested the model's rules only as a set. Drazin and Van de Ven (1985), a quantitative study of 629 work units, found single factor-structure pairings, the interaction form of fit, unsupported; and Volberda and colleagues (2012), a survey of 1,904 companies, found firms with perfect institutional fit lose slightly by striving for contingency fit.

Others are disputed: divisions with reciprocal work (above); divisions for an analyzer, a misfit in the 2015 book and recommended in the 2004 one; and a defender's rule-bound structure kept after the environment turned unpredictable, our judgment after Miles and Snow's (1978) third route to the reactor, its heavy-rules half disputed. On the reactor itself, the 2004 book calls it not viable, the 2015 one fits it to a calm environment, and Snow and Hrebiniak (1980), a study of top managers' perceptions in four industries, on data they call only suggestive, found reactors were outperformed in competitive industries but not in a highly regulated one. The rules against heavy rules for a small firm, a prospector, nonroutine work, or an unpredictable environment each have an answer on record, among them Sine, Mitsuhashi, and Kirsch (2006), a quantitative study of new ventures in one sector, and Adler and Borys (1996, a conceptual argument).

What the research found

Stopford and Wells (1972), read only in passages, studied 187 U.S. multinational enterprises and found structure changing in stages, with area divisions in most firms selling over 40 percent abroad. No study read compares this form's performance with other forms'.

Egelhoff (1982), a multi-firm study of 34 multinationals, generally confirmed an information-processing model of fit; his 1988 multi-firm study found only some of Stopford and Wells's relationships held, with the relative size of foreign manufacturing an important predictor. Wolf and Egelhoff (2002) found general support for the traditional fits, as association only; Habib and Victor (1991) found firms chose the prescribed structures (both graded above). Devinney and colleagues (2000) argue that average-based methods may hide differences between forms.

In Leong and Tan (1993), a survey of 131 senior executives classifying their own organizations by Bartlett and Ghoshal's (1989) typology, the multinational and global types matched it better than the international and transnational. Harzing (2000), a survey of 166 subsidiaries of 37 multinationals, built clusters from strategy items and found three types differing in local responsiveness and interdependence.

Two pressures on a multinational, and the three pairings that name a type

Global integration pressure across, local responsiveness pressure up, each at the factors' own three levels. Select a structure, then the box it belongs in, or show the sort. The cut points between levels are judgment. Where each of the three forms fits on the two pressures is contested (Devinney and colleagues 2000 argue firms can meet them in many configurations). Bartlett and Ghoshal's international type is not placed because no record places it.

Items (select one, then a box)
  • Not placedPlacedGlobalMulti-domesticTransnationalNo type named
  • Not placedPlacedGlobalMulti-domesticTransnationalNo type named
  • Not placedPlacedGlobalMulti-domesticTransnationalNo type named

Local responsiveness pressure

HighModerateLow
Multi-domestic
No type named
Transnational
Global
LowModerateHigh

Global integration pressure

Global: Strong pressure to integrate activities across countries, little to adapt to each.Multi-domestic: Strong pressure to adapt to each country, little to integrate across them.Transnational: Strong pressure to integrate and to adapt at once.No type named: No record names a type of multinational for these cells. A firm that operates in one country sits low on both pressures.Select a structure, then the box it belongs in.Global product division.Not placed yet.Global product division.Global: Strong pressure to integrate activities across countries, little to adapt to each.Worldwide product divisions own their product everywhere and run it the same way everywhere, so they can integrate it across countries, while strong pressure to adapt to each country cuts across their product lines: Bartlett and Ghoshal's global type, under the multidivisional form.Global product division.Multi-domestic: Strong pressure to adapt to each country, little to integrate across them.Global product division.Transnational: Strong pressure to integrate and to adapt at once.Global product division.No type named: No record names a type of multinational for these cells. A firm that operates in one country sits low on both pressures.Area divisions.Not placed yet.Area divisions.Global: Strong pressure to integrate activities across countries, little to adapt to each.Area divisions.Multi-domestic: Strong pressure to adapt to each country, little to integrate across them.Area divisions own every product in a place, so each can adapt to its countries, while strong integration pressure cuts across their territorial lines: Bartlett and Ghoshal's multinational type, which Harzing (2000) tests as the multi-domestic type, and the divisional by region form.Area divisions.Transnational: Strong pressure to integrate and to adapt at once.Area divisions.No type named: No record names a type of multinational for these cells. A firm that operates in one country sits low on both pressures.The transnational.Not placed yet.The transnational.Global: Strong pressure to integrate activities across countries, little to adapt to each.The transnational.Multi-domestic: Strong pressure to adapt to each country, little to integrate across them.The transnational.Transnational: Strong pressure to integrate and to adapt at once.Built for strong pressure to integrate across countries together with strong pressure to adapt to each, it gives national units differentiated roles inside one network.The transnational.No type named: No record names a type of multinational for these cells. A firm that operates in one country sits low on both pressures.

Your sort matched 0 of 3.Your sort matched 1 of 3.Your sort matched 2 of 3.Your sort matched 3 of 3.

Global
Strong pressure to integrate activities across countries, little to adapt to each.
Multi-domestic
Strong pressure to adapt to each country, little to integrate across them.
Transnational
Strong pressure to integrate and to adapt at once.
No type named
No record names a type of multinational for these cells. A firm that operates in one country sits low on both pressures.

The sort

  • Global product division: Global. Worldwide product divisions own their product everywhere and run it the same way everywhere, so they can integrate it across countries, while strong pressure to adapt to each country cuts across their product lines: Bartlett and Ghoshal's global type, under the multidivisional form.
  • Area divisions: Multi-domestic. Area divisions own every product in a place, so each can adapt to its countries, while strong integration pressure cuts across their territorial lines: Bartlett and Ghoshal's multinational type, which Harzing (2000) tests as the multi-domestic type, and the divisional by region form.
  • The transnational: Transnational. Built for strong pressure to integrate across countries together with strong pressure to adapt to each, it gives national units differentiated roles inside one network.

The global and multi-domestic types each answer one pressure and sit in opposite corners; the transnational is the corner where both are high at once. No record names a type of multinational for the other six cells.

Source: Prahalad and Doz 1987; Bartlett and Ghoshal 1989, case studies of nine multinational companies in three industries; Harzing 2000, a survey of 166 subsidiaries of 37 multinationals; Devinney and colleagues 2000, a formal model with no new data.

In a large-sample statistical study of Japanese multinationals, Schotter, Stallkamp, and Pinkham (2017) found subsidiary numbers and dispersion shape whether regional headquarters form, the abstract giving no direction. Chakravarty and colleagues (2017), another large-sample statistical study, found dedicated regional headquarters and subsidiaries' regional mandates differ in characteristics and performance, without saying which does better. Asakawa (2020), an empirical comparison of R&D subsidiaries across multinationals, found those reporting to regional headquarters showed the lowest internal knowledge sharing, an association read in the abstract.

That study and Geleilate, Andrews, and Fainshmidt (2020), a meta-analysis of 94 studies of foreign subsidiaries, are the most recent; the latter found that autonomy may improve subsidiary performance in some contexts: a finding about a territory's freedom, not the form.

The causal claim is disputed. Hall and Saias (1980) argued that strategy, structure, and environment are closely linked and that structure later constrains strategic choices; Galan and Sanchez-Bueno (2009), a multi-firm statistical study, found that diversification and divisionalization each affect the other and concluded that Chandler's thesis still works. Fligstein (1985), a multi-firm historical statistical study, found strategy one of three conditions for the spread of divisions, and Palmer, Jennings, and Zhou (1993), a multi-firm statistical study of adoption, found considerable support for an institutional account of late adoption of the multidivisional form, with wider industrial or geographic scope raising its likelihood.

The evidence ledger holds 15 studies filed under this form.

In practice: one published case

Sears, Roebuck and Company, as Chandler (1962) tells it, is one historical case study of a firm that tried territorial divisions twice.

In 1929 a Committee of Reorganization, set up by General Robert Wood, created five territorial divisions inside the older functional organization in Chicago. It failed: lines of authority between the territories and the Chicago functional departments were unclear, and the territories lacked the personnel and information their tasks required. Amid that conflict and the depression, Wood abolished the territories in 1932 and returned to a centralized functional structure.

From 1940 Wood tried the plan again, starting in 1941 with a Pacific Coast Territory. By 1948 each territorial vice-president had complete charge of operations in his area. Buying and the factories stayed with the parent office, which kept merchandising, factory management, and the financial offices beside four staff departments that could advise but not order and had an auditing responsibility.

Chandler concluded that by 1948 Sears had reached a structure much like those designed earlier at General Motors, du Pont, and Jersey Standard. The process was slower because of the depression and Wood's distrust of bureaucratic procedure, and the conflicts might have been solved in 1932 had the territories been made full multidepartmental divisions.

Source: Chandler 1962. Strategy and Structure: Chapters in the History of the Industrial Enterprise, MIT Press, Cambridge, MA (xiv and 463 pages); several independent case histories by a historian.

Variants and near relatives

The international division is Stopford and Wells's (1972) early stage: all foreign activity in one division beside the domestic product divisions. The worldwide area structure is the later stage, the world cut into regions, each a full division.

The mother-daughter structure is what Franko (1976) found in continental European multinationals: a personal line from the parent's president to the subsidiaries' presidents, which firms later abandoned for other structures; the Cistercian houses, under the federal organization, are another thing.

Field administration: functional and prefectoral systems is the government version. Each ministry may run its own field service (functional), or a prefect, the central government's general representative in an area, coordinates the services there and, when integrated, holds the ministries' delegated powers (Smith 1967). Only the prefectoral system makes this form's move; the functional system is a functional structure with field offices. An office answering to both a territorial government and its functional line, as in China's tiao and kuai, makes the matrix's move instead.

Carbon-copy divisions repeat one unit design in many places, as chains and banks run identical branches (Burton and Obel 2004, who take the name from Mintzberg); franchising, across the firm's boundary, is not covered. Knott and Turner (2019), a quantitative study of many firms in one industry with a formal model, propose that in chains headquarters adds value by encouraging market-like dynamics among units; among banks scale and hierarchy both suppressed innovation once the units' number, knowledge heterogeneity, and distance were accounted for, against Chandler's and Williamson's resource-allocation accounts. Farrell, Wohlstetter, and Smith (2012), a qualitative study of 25 organizations, describe charter management organizations, nonprofits running networks of charter schools with shared central support, reporting promising signs of leverage and nimbleness but no student outcomes. The hub-and-spoke health network (Elrod and Fortenberry 2017, a single descriptive case) routes patients among unequal sites, so it belongs to Workflow Topologies.

Team policing gave neighborhood teams every police service in an area under one supervisor (Sherman, Milton, and Kelly 1973, seven descriptive case studies, not evaluations); in some cities it became a public relations label.

Where some functions stay central, this form meets the hybrid entry's Functional-divisional hybrid. Mintzberg's (1980) incomplete divisionalization is read both ways: the profile places it here, at the mixed level; a second view on local responsiveness places it with the hybrid.

The Multidivisional (M-form) by product, its nearest neighbor, gives each unit head one product everywhere; this form cuts by territory, so each head owns every product in a place. The global matrix crosses areas with product divisions; the regional headquarters belongs to the corporate center.

The regional form beside its nearest neighbor, the multidivisional form

Select a number to fill what it marks in both drawings; the list under them gives the dimensions on which the two profiles differ.

It cuts the firm by territory: each unit head owns every product in a place, where a product cut gives each head one product everywhere.

Divisional by region

Policy and capitalCenterTerritoriesand staffWithin eachterritoryChief executiveand centerTerritorydivisionTerritorydivisionTerritorydivisionFunctions keptcentrallyEvery productin its areaEvery productin its areaEvery productin its areaBy placeO111123
Policy and capitalCenterTerritories and staffWithin each territoryCenterTerritoryTerritoryTerritoryCentralProductsProductsProductsBy placeO111123

Reports toOStandardization of outputs

Multidivisional (M-form) by product

Capital and targetsGeneral officeProductdivisionsWithin eachdivisionGeneralofficeProductdivisionProductdivisionProductdivisionProductdivisionDivision'sown functionsDivision'sown functionsDivision'sown functionsDivision'sown functionsBy productO122223
Capital and targetsGeneral officeProduct divisionsWithin each divisionGenofficeDivisionDivisionDivisionDivisionFunctionsFunctionsFunctionsFunctionsBy productO122223

Reports toOStandardization of outputs

  1. The regional form groups its divisions by place, so each head owns every product in one area; the multidivisional form groups them by product.
  2. The regional form keeps some critical functions, such as purchasing in a regional retail chain, at the center; each product division holds most of the functions its business needs.
  3. The regional center sets policy and allocates capital inside one hierarchy (our judgment); Williamson reads the general office's capital and targets as a miniature capital market inside a hierarchy.

Differs on 2 of 11 dimensions

  • Basis of grouping Place; Multidivisional (M-form) by product: Product or purpose
  • Mode of exchange and control Bureaucracy; Multidivisional (M-form) by product: Market and bureaucracy

Both forms put divisions under a center that judges them by standardized outputs. The regional form cuts the firm by territory, so each head owns every product in a place, and the multidivisional form cuts it by product.

Source: Chandler 1962, several independent case histories by a historian; Stopford and Wells 1972, a study of 187 U.S. multinational enterprises; Mintzberg 1980, a synthesis of earlier research, offering propositions without a new test; Williamson 1975.

Moving into or out of it

Firms come in from a functional structure as they spread geographically (Chandler 1962) or, abroad, from an international division (Stopford and Wells 1972).

Stopford and Wells (1972) give the global structures as alternatives, not a sequence: area or worldwide product divisions or a mix of the two, with a product and area grid only expected. Qiu and Donaldson (2012), a preliminary test on German multinationals, found corporate integration and area diversification the dominant strategies associated with matrix use.

The reorganization evidence is borrowed from product divisions: Hoskisson and Galbraith (1985), a time-series study of six firms, found quantum moves to the M-form better than incremental ones, and Girod and Whittington (2016), a multi-firm panel study, found sweeping restructuring helped in general and hurt in dynamic environments. Running a reorganization is a matter for Change & Transformation.

The thinking behind it

Alfred Chandler (1962): structure follows strategy, why firms that spread out leave the functional form; four firms, with the causal direction disputed.

John Stopford and Louis Wells (1972): the stages model, source of the international division and area divisions.

William Egelhoff (1982, 1988), with Joachim Wolf (2002): information-processing fit, when area divisions carry what a strategy needs.

Henry Mintzberg (1980): configurations of structure, the frame for this form's standardization of outputs; a synthesis, not a test.

Richard Burton and Børge Obel (2004), with Dorthe Døjbak Håkonsson in their 2015 book: the multi-contingency model, whose rules are propositions.

C. K. Prahalad and Yves Doz (1987): integration and local responsiveness, the multinational's two demands, which this form trades.

Luther Gulick (1937): place as a basis of grouping.

Anne Marie Knott (2019): headquarters value from market-like dynamics among a chain's units, tested in banking.

Also called

Geographic structure, area structure, and territorial divisions. Stopford and Wells (1972) write of area divisions. The explorer files Bartlett and Ghoshal's (1989) multinational type here; in government it is the prefectoral system (Smith 1967).

Works cited

On this page, “read” means read by this series: where a line says a work, or part of one, was not read, the series did not read it.

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