THE EFFECT OF ORGANIZATIONAL STRUCTURE TO CORPORATE GROWTH STRATEGY: A STUDY OF ICT SOLUTION VENDORS IN KENYA

Abstract

An organizational structure defines the scope of acceptable behavior within an organization, its lines of authority and accountability, and to some extent the organization's relationship with its external environment. Organization structure plays a major role in decision making process and change management. Prior studies had identified lack of access to capital, low management skills, poor infrastructure and accessibility to markets and market information, low technological skills and adoption as internal constraints affecting the growth of the industry and hence this study sought to analyze development of organization structure as one of the factors that affect the growth of ICT companies operating in Kenya. The aim of the study was to establish how organizational structure influences corporate strategy. The study used a descriptive survey approach to examine the effect of organizational structure on corporate growth. The target population of this study was ICT dealers in Kenya from which primary data was collected using three questionnaires, coded according to the variables of the study, edited and analyzed.The study found out that a large percentage of the companies sampled achieved growth through product diversification and individual efforts by the owners/ CEOs with the rest indicating that they achieved growth by acquisition of competitors leading to the conclusion that mergers and consolidations was not a common way to achieve growth in the ICT sector though it would be the most effective channel to product diversification. It is also evident that there were major differences between the responses by the managers and the employees in this study showing a clear indication that the employees may not have an understanding of the actual chain of command in their organizations or there exist no defined chains of command in the organizations sampled. Secondly, findings show that the corporate structure is given insignificant consideration in determining the corporate growth strategy in that in many ICT companies in Kenya today and the major decisions are made by CEO with little or no consultations with the middle level managers. Considering that they work in the same environment the mismatch between the responses by employees and managers regarding the centrality of decision making indicates that there is a serious communication breakdown between managers and employees on the decision making criteria.