MANUFACTURING POLICY AND STRUCTURE AS AFFECTED BY ENVIRONMENT, SIZE AND TECHNOLOGY: A CONTINGENCY APPROACH

Abstract

There have been calls in the P/OM literature for research aimed at a better understanding of manufacturing policy and requests in the OB literature for further clarification of the nature and effects of "contingency" variables. A field study was done in an effort to address both of these concerns. The study involved 20 manufacturing firms of 1,000 or more employees in four different industries. A theoretical model was developed which suggests a link between the degree of stability in the external environment and various aspects of structure and policy in manufacturing departments. The hypotheses tested predicted that policy would differ for firms facing different environments and that if policy and environmental conditions were appropriately matched, better departmental performance would result. Results indicate that the degree of environmental stability may relate negatively to the level of administrative intensity, the degree of preference for small versus large plants, and the degree of preference for low versus high inventories. These findings were in accord with the theory of the model. No support was indicated for predictions that the degree of environmental stability would correlate negatively with spans of control and with preferences for general-purpose equipment or for the expected positive relationship between stability and number of organizational levels or preferences for process structures. There was also no support found for the hypothesis that better "fit" of environment with policy/structure leads to better performance. There was some evidence that type of technology affects spans of control, number of levels, type of equipment preferred, and levels of inventories preferred, but no support for the importance of size (of firm) as an influence on policy and structure. The thesis discusses possible explanations for unexpected results and offers specific suggestions for future research.