DOES ORGANIZATION STRUCTURE MATTER? On the relationship between the structure, functioning and effectiveness Abstract: Managers often see new organizational designs as the solution to many problems. This paper explores the relationship between organization structure (design), functioning of organizations, and effectiveness. A study of 320 companies showed that the structural variable decentralization marginally affected the way in which organizations function. Functional variables had a minor

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... pact on profitability. No direct relationship between structure and effectiveness was found. When functioning is conceptualized as a mediating factor no direct causality between structure and effectiveness is implied, but a relationship between structure, function and effectiveness. To improve effectiveness, reorganizing is probably not the first option to consider.