Small Business Economics

, Volume 39, Issue 2, pp 301–317 | Cite as

Organisation structure and innovation performance in different environments

  • Andy CoshEmail author
  • Xiaolan Fu
  • Alan Hughes


This paper examines the relationship between organisation structure and innovation performance in a large sample of UK small and medium-sized enterprises. It asks whether there is an optimal structure and whether this differs between different firm environments and between young and older firms. We find that the influences on the ability to innovate differ from those on the commercialisation of innovations. We show that decentralised decision-making, supported by a formal structure and written plans, supports the ability to innovate in most circumstances and is superior to other structures. We also find some evidence that young firms operating in high technology sectors with informal structures have a greater tendency to be innovative. In addition, we find very few differences between young and older firms in terms of their optimal structures in low technology sectors.


Formality Organisation structure Management practices Innovation Small and medium-sized enterprises 

JEL Classifications

L22 L25 L26 M21 M52 


  1. Athey, S., & Roberts, J. (2001). Organizational design: Decision rights and incentive contracts. Organizational Economics, 91, 200–205.Google Scholar
  2. Atkinson, J., & Meager, N. (1994). Running to stand still: The small firm in the labour market. In J. Atkinson & D. Storey (Eds.), Employment, the small firm and the labour market (pp. 28–102). London and New York: Routledge.Google Scholar
  3. Audretsch, D. B. (2001). Research issues relating to structure, competition and performance of small technology-based firms. Small Business Economics, 16, 37–51.CrossRefGoogle Scholar
  4. Black, S. E., & Lynch, L. M. (2004). What’s driving the new economy?: the benefits of workplace innovation. The Economic Journal, 114, 97–116.CrossRefGoogle Scholar
  5. Burns, T., & Stalker, G. M. (1961). The management of innovation. London: Tavistock Publications.Google Scholar
  6. Butchart, R. L. (1987). A new definition of the high technology industries, economic trends. London: HMSO.Google Scholar
  7. Cosh, A. D., & Hughes, A. (2003). Enterprise challenged: Policy and performance in the British SME sector 1999–2002. Cambridge: ESRC Centre for Business Research University of Cambridge.Google Scholar
  8. Covin, J. G., & Slevin, D. P. (1989). Strategic management of small firms in hostile and benign environments. Strategic Management Journal, 10, 75–87.CrossRefGoogle Scholar
  9. Curran, J. (1986). Bolton fifteen years on: A review and analysis of small business research in Britain (pp. 1971–1986). London: Small Business Research Trust.Google Scholar
  10. Dalton, D. R., Tudor, W. D., et al. (1980). Organisation structure and performance: A critical review. Academy of Management Review, 5, 49–64.Google Scholar
  11. Daly, M. (1987). Lifespan of businesses registered for VAT. British Business, 3(April), 28–29.Google Scholar
  12. Damanpour, F. (1991). Organisational innovation: A meta-analysis of effects of determinants and moderators. Academy of Management Journal, 34, 555–590.CrossRefGoogle Scholar
  13. Foss, N. J., & Laursen, K. (2005). Performance pay, delegation and multitasking under uncertainty and innovativeness: An empirical investigation. Journal of Economic Behaviour and Organisation, 58, 246–276.CrossRefGoogle Scholar
  14. Green, K. M., Covin, J. G., & Slevin, D. P. (2008). Exploring the relationship between strategic reactiveness and entrepreneurial orientation: The role of structure-style fit. Journal of Business Venturing, 23, 356–383.CrossRefGoogle Scholar
  15. Khandwalla, P. N. (1976/1977). Some top management styles, their context and performance. Organization and Administrative Sciences, 7, 21–52.Google Scholar
  16. Kimberly, J. R. (1976). Organizational size and the structuralist perspective: A review, critique and proposal. Administrative Science Quarterly, 21, 571–597.CrossRefGoogle Scholar
  17. Laursen, K., & Foss, N. J. (2003). New human resource management practices, complementarities and the impact on innovation performance. Cambridge Journal of Economics, 27, 243–263.CrossRefGoogle Scholar
  18. Laursen, K., & Salter, A. (2006). Open for innovation: The role of openness in explaining innovation performance among UK manufacturing firms. Strategic Management Journal, 27, 131–150.CrossRefGoogle Scholar
  19. Meijaard, J., Brand, M. J., & Mosselman, M. (2005). Organisational structure and performance in Dutch small firms. Small Business Economics, 25, 83–96.CrossRefGoogle Scholar
  20. Simonen, J., & McCann, P. (2008). Innovation R&D cooperation and labour recruitment: Evidence from Finland. Small Business Economics, 31, 181–194.CrossRefGoogle Scholar
  21. Sine, W. D., Mitsuhashi, H., & Kirsch, D. A. (2006). Revisiting Burns and Stalker: Formal structure and new venture performance in emerging economic sectors. Academy of Management Journal, 49, 121–132.CrossRefGoogle Scholar
  22. Stinchcombe, A. (1965). Social structure and organizations. In J. March (Ed.), Handbook of organizations (pp. 142–193). Chicago: Rand McNally.Google Scholar
  23. Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18, 509–533.CrossRefGoogle Scholar
  24. Vaona, A., & Pianta, M. (2008). Firm size and innovation in European manufacturing. Small Business Economics, 30, 283–299.CrossRefGoogle Scholar
  25. Wally, S., & Baum, J. R. (1994). Personal and structural determinants of the pace of strategic decision making. Academy of Management Journal, 37, 932–956.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC. 2010

Authors and Affiliations

  1. 1.Centre for Business Research, Queens’ CollegeUniversity of CambridgeCambridgeUK
  2. 2.Queen Elizabeth HouseUniversity of OxfordOxfordUK
  3. 3.Centre for Business Research, Judge Business SchoolUniversity of CambridgeCambridgeUK

Personalised recommendations