An holistic approach to understanding the changing nature of organisational structure

The purpose of this paper is to report on an exploratory study to revisit and critically reappraise the impact of IT upon organisational structure, by exploring how the deployment of ERP, when accompanied by a specific strategic orientation, impacted upon the host organisation's structural design.

The study was initially enacted through a postal questionnaire survey of IT managers within a sample of China's largest manufacturing organisations. Follow‐up interviews were then conducted with senior managers, who had first‐hand experience of working on ERP implementations, to help to more fully understand the impact of ERP upon organisational structure.

The study found that the implementation of ERP technology and the strategic orientation of the host organisation are both likely to modify the structural design of Chinese manufacturing organisations. Moreover, it has been found that the success of an ERP deployment is a stronger predictor of organisational form than the scale of the deployment. The results of the study would also suggest that ERP is more likely to affect structural changes, when deployed in the presence of a complementary “prospector” corporate strategy.

The study provides clear new evidence that ERP is likely to have a significant impact upon organisational structure, but, because of the complexity of the technology and the uniqueness of every organisational context, the authors offer no simple prescriptions or panaceas as to how it should be managed. However, managers should be aware that an ERP implementation will almost certainly affect organisational structure, and then take steps to ensure that such changes are carefully and proactively managed.

There is already a rich and established literature with regard to the impact of IT upon organisational structure. However, it could be argued that by focussing upon ERP, by explicitly modelling the effect of strategy and by taking a holistic view of organisational structure, the paper is able to offer a far more subtle view of the complexities of the relationship between IT and organisational structure than prior studies.