Interdependencies in Organization Design: A Test in Hospitals

Abstract

While there have been numerous empirical and theoretical contributions in both the accounting and management literatures examining independently the implications of strategy and structure on control system design, there has been little research examining the interdependencies among the various elements of organization design. Hospitals represent an empirical setting where a diversity of structural arrangements and strategic orientations are both readily observable and recognized as having implications for other elements of control systems. Using data collected from chief executive officers and medical directors in hospitals, this study examines how strategic choices influence adaptations in structure and performance measurement systems. The findings from this study suggest that there are significant interdependencies between strategic choice, structure, and performance measurement system design and that when the separate elements of organization design complement each other, performance is enhanced.