Structures makes the world go around; financially? : A Quantitative Study on the Impact of Organizational Structures on Financial Performance

The organizational structure is unquestionably a very important managerial tool for firms. Based on the purpose of the structure, it has a large influence on how the operation of the firm is performed, which can create incentives for picking the most suitable one. According to the contingency theory, there is no best option, the most suitable structure is dependent on contextual factors in each individual case. Contrary, previous studies have shown that organizational structure has significant influence on the performance and even certain types of structures.There is currently a research gap regarding if certain types of structures could lead to better financial performances. This quantitative study was conducted using a positivistic paradigm, with a deductive approach. 216 companies were analyzed and two-sample t- tests were conducted to test the data. The divisional, functional, hierarchical, horizontal, and matrix organizational structures have been used and the financial performance measures Return on Assets, Return on Equity, and Return on Invested Capital. Industry and country have been used as descriptive variables.By conducting a MANOVA test the first research question was answered, “Does the organizational structure influence the firm’s financial performance?”, the results were insignificant, the organizational structure does not influence the firm’s financial performance. This question provided an aggregated view of the influence of structures while the second question was aimed to provide a decomposed view by looking closer at the influence of the structures against each other.To answer the second research question, “Is there a certain organizational structure that has a higher influence on the firm’s financial performance?”, several two-sample t-tests were conducted. The results from the two-sample t-tests show that there is a significant difference in the Return on Assets when using a divisional structure rather than a matrix structure and that there is