The effects of customer contact on organizational structure and performance in service firms

Abstract

This study examines how customer interactions affects the organizational structure of service organizations, as well as how the alignment between firm structure and customer contact influences organizational performance. Results obtained from 234 service organizations in 96 different industries support our contention that variance in demand generated by the level of customer interaction strongly influences the type of structure a service firm adopts. High degrees of customer contact were significantly related to the use of higher degrees of organizational flexibility. In addition, the results indicate that firms that align organizational flexibility with customer contact achieve superior performance.