Building Blocks and Organizational Performance

Building Blocks and Organizational Performance 

ORISHEDE, Felix

Department of Business Administration, Faculty of Management Sciences

Delta State University, Abraka, Delta State, Nigeria

DOI: https://dx.doi.org/10.47772/IJRISS.2023.7012151

Received: 13 December 2023; Revised: 22 December 2023; Accepted: 26 December 2023; Published: 21 January 2024

ABSTRACT

The study examined the effect of building blocks on organisational performance. The specific objectives were to examine the effects of organizational procedure on organisational performance and the effect of management hierarchy on organisational performance. The study used a sample size of 120 respondents out of a total population of 150 employees of the selected organisations which were selected at random. Copies of semi-structured questionnaire were used to obtained primary data. The study used a descriptive survey design approach and multiple regression analysis as statistical tools to test the hypotheses of the study. The study found that organisation procedure and management hierarchy have positive and significant effects on organisational performance. The study concludes that organisational procedure and management hierarchy can favourably influence organizational performance, in order for businesses to succeed in a highly competitive environment, they must be responsive to the needs and wants of their customers, they must be market-oriented in terms of their focus on their customers, their orientation towards competitors, and the coordination of their internal departments’ various functions. The study recommends that firms should encourage a proper Management Hierarchy and adequate organisational procedure in order to improve organisational performance y in all department of the organisation.

Keywords: Building Blocks, Organizational performance, Organization Procedures and Management Hierarchy

INTRODUCTION

Organisations typically create structural and cyclical hurdles to remain competitive in a continuously changing market, as such SMEs must increase their performances in order to gain and sustain a competitive advantage.  In doing so, the organisation must be able to provide services and goods that not only consistently meet the demands of its customers but also able to foresee future market possibilities and fulfil existing client expectations. According to Winter (2000), “a high level of routine (or a set of routines) is an organisational capacity.” This provides management with a set of alternatives for making decisions that will result in substantial outputs of a certain sort” (Winter, 2000). When organization deploys, combines, and coordinates its resources and skills through value-creating processes, the organisation is able to carry out its productive activities efficiently, effectively and achieve its predetermined goals. Organisational capabilities, according to Teece et al. (1997), refers to a company’s practice of integrating, developing, and reconfiguring internal and external talents to respond quickly to the constantly changing environment. SMEs make up more than 90% of businesses in the European Union (European Commission, 1996), even though they only make up 60% to 70% of employment globally (OECD, 2000). This is also true in Cameroon, where SMEs account for 90% to 95% of all business establishments and 49.7% of all assets (Perdrix, 2005).

Many government authorities have made several efforts to support SMEs, yet no meaningful improvements have been recorded, this is partly traceable to management lack of capacity to effectively grow the SMEs for sustainability. It is even more true when we consider that these SMEs struggle to properly channel and utilise the capabilities they possess. Although, for organisations to reach its goals, the skills, knowledge, attitude and efforts of its workforce must be targeted towards optimizing the effectiveness of its workforce and to enable them meet greater challenges (Orishede, Echimina, Uyo & Edewor, 2023).

The survival and sustainability of SMEs depend more on their capacity, particularly by becoming more innovative and agile to adapt to an increasingly complex, uncertain, and paradoxical world, as well responding to a growing demand from employees who aspire for better performance in the current context of the pandemic Covid-19 crisis that has undermined the survival many organisations. Even though there is the need for SMEs to expand, according to Orishede (2020), the drive to meet expansion needs should not neglect basic minimum standards. In order to better adapt to this new environment, SMEs have every incentive to modify their management models and innovate new business practices (Boubakary, 2019; Boubakary and Zerbib, 2019). According to Kamdem (2016), more than half of the world’s economic growth champions in the next ten years will come from Africa, and SMEs managers would gain from employing all of their inventiveness and imagination to succeed in the face of a crisis.

Statement of Problem

It has been stated that securing a position of competitive advantage comes before a company performs significantly. The age and size of a corporation are two possible modifiers in the link between building block of competitive advantage and performance. Managers’ strategic business actions can be directed towards strengthening the overall position of their firms with knowledge of such possible moderating impacts. Because of the dynamic and competitive nature of the present business climate, it is essential for business enterprises to have a thorough awareness of the market in which they operate. A near-perfect grasp of the market is one necessity for a corporation to achieve exceptional organisational performance in a competitive and dynamic marketplace. Customers in the market place are now more informed about their requirements, wants, and rights as well as the numerous companies that provide customers a higher value. Due to this, businesses now need to be market-oriented in order to grow their market share and perform better.

Research Objectives

The general objective of the study is to examine the effect of building blocks on organizational performance. The specific objectives are to:

1. examine the effect of Organisation Procedures on organizational performance.
2. determine the effect of Management Hierarchy on organizational performance.

Research Questions

1. What is the effect of organisation procedure on organizational performance?
2. Does Management Hierarchy affect organizational performance?

Study Hypotheses

The study was guided by the following stated hypotheses

H_o1: There is no significant difference between Organisation Procedures and organizational performance.

Ho₂:     There is no significant difference between Management Hierarchy and organizational performance.

REVIEW OF RELATED LITERATURE

Organization Procedures

According to Halila and Rundquist’s 2011 article, “The development and market success of eco-Organization Proceduress,” the phrase “Organisation Procedures” often refers to three different types of organisational procedures: process, product, and organisational. When identifying Organisation Proceduress that contribute to a sustainable environment through the creation of ecological improvements, terms like “organisation procedures,” “green organisation procedures,” “environmental organisation procedures,” and “sustainable organisation procedures” are frequently used (Becker & Egger, 2013). According to Halila and Rundquist’s 2011 article, “The development and market success of eco-Organization Proceduress,” support and maintenance for the development and transmission of more environmentally friendly processes, products, organisational models, and systems can lead to improvements in the living conditions of both current and future generations. Success in the workplace as in other organizational settings depends on the behavior and the roles leaders brings to bear upon issues (Ogbor & Orishede, 2018). Any type of product, procedure, or organisational Procedures that contributes to sustainable development is referred to as environmental Organisation Procedures (Doran & Ryan, 2014). In order to diagnose, watch for, and/or avoid environmental problems, organisations must modify or build organisational procedures. Organisational procedures are no longer seen as an additional burden on the firm’s costs, as many managers and economists used to do (Doran & Ryan, 2014).

Due to the necessity to address the many environmental concerns of today, there is a greater need and demand for organisational procedures. According to Rennings and Zwick (2002), organisational procedures relate to the process of generating concepts, methods of operation, goods, and processes that help reduce environmental burdens or achieve environmental sustainability goals. According to Halila & Rundquist (2011), creating an effective and efficient Organisation Procedures programme and making it a permanent part of a firm’s management programmes is important given the constantly increasing pressure from the government and market regarding mechanised sustainability. Also, employees should be seen to be fair procedurally in the process of carrying out their jobs, according to Orishede & Bello (2019), a procedure whereby employees discern procedure in their working environment, reciprocal action and results of being fair. SThere are several kinds of organisational procedures, including organisational, process, and product organisational procedures, that are used in practise. It is not very effective to execute Organisation Procedures without a holistic perspective, even if each type of Organisation Procedure has its own determinants, attributes, and contributions to corporate performance (Cheng, Yang, & Sheu, 2014).

Organizational flexibility

Performance is one of the hardest management concepts to describe since it is difficult to separate it from the environment in which it is used. Performance is connected to an organization’s ability to continue to provide value, claim Botton et al. (2012). The complexity of the concept of organisational performance, according to Messaoudène & Hernandez (2013), is brought on by how it varies based on the people, groups, and industries involved. It suggests having the ability to achieve previously set goals, i.e., reducing the gaps between ends and means. In contrast, Kalika (1988) defined organisational performance as “measures directly related to the organisational structure and not to its possible social or economic consequences.” According to these indicators are fascinating since they enable the early identification of organisational issues before their economic effects are seen. According to Bouquin (1997), organisational performance refers to a company’s ability to effectively establish and carry out plans as part of its intended objectives. The four pillars of organisational effectiveness, according to Kalika (1988), are respect for the formal structure, connections across services to lessen conflict, the quality and fluidity of information flow, and the structure’s capacity to adapt to environmental constraints. According to Morin, Savoie, and Beaudin (1994), evaluating an organization’s performance is based on a variety of factors that are desired, desirable, and sought-after results. Productivity, efficiency, and profitability are the three characteristics that these writers assign to organisational success. According to Sicotte et al. (1999) and Giauque et al. (2008), achieving the mission of the organisation, acquiring and controlling resources and skills, providing high-quality services, and creating and upholding a unified culture and set of values are the four dimensions that define performance. We define organisational performance in the context of this study as the way the business is set up to fulfil its goals and how it succeeds to do so, taking into account the perspectives of these many writers. How much do talents and abilities, however, actually go towards achieving organisational performance?

Performance of an organisation involves actual productivity or results of a firm that are measured in opposition to planned productivity or targets and goals. The capacity of a company to achieve its aims and objectives with the aid of competent management, sound governance, and a consistent commitment to achieving business objectives has been characterised as organisational performance (Mahapatro, 2013). Organisational performance is a measure of how successfully a company achieves its objectives. One of the most important concepts in management research is organisational performance (Ho, 2008). Different researchers have different definitions of organisational performance. According to Shahzad, Luqman, Khan, and Shabbir (2012), the majority of studies referred to their collection of measurements of transactional efficiency and input and output efficiency as performance. A very broad notion, “organisation performance” includes all aspects of managerial excellence, operational excellence, and competitive excellence of an organisation and its operations. Other than financial performance, various non-financial performance measures, such as market performance and customer satisfaction, have been mentioned in prior research to better knowledge of organisation success (Chen & Quester, 2006). In the wake of rapid changes in the internal and external environments of organization, only those with flexible culture and a workforce that is adaptableto change are most likely to keep pace with the dynamism of

Relationship between Organization Procedures and Organizational Performance

Today, a large number of SMEs are employing organisational procedures more and more (OECD, 2005), which is even seen to be a key factor in their competitiveness (OSEO, 2008). Neely & Dehoff (2004) claim that Organisation Procedures is a talent that enables the definition and creation of new goods and services in order to swiftly make them marketable. This concept covers all marketing, management, and distribution as well as organisational procedures in research and development. The amount of organisational procedures that an organisation is able to adopt or effectively apply can help us understand their capacity for innovation. The word “organisation procedures” is used frequently in the management world since it is crucial to managing an organisation and, more importantly, helps it succeed and perform well (Montoya-Weiss & Calantone, 1994). The connection between organisational performance and organisational procedures has been the subject of several authors. It is important to highlight that the majority of writers (Damapour, 1991; Capon et al., 1992; Slater, 1997; Hurley & Huit, 1998; Berton et al., 2004; Remon, 2012; Caverot et al., 2014; Temri et al., 2015) concur that Organisation Procedures are responsible for achieving greater performance. Damapour (1991) points out in particular that the implementation of organisational procedures typically enhances the effectiveness and performance of the organisation. He noted that organisational procedures are implemented to enhance performance or close performance gaps that may be brought on by alterations in the internal or external environment, such as changes in demand. In fact, companies with better innovation capabilities are able to gain a competitive advantage and execute at a high level (Hurley & Huit, 1998). Duong & Paché (2015) also support the function of dynamic Organisation Procedures capability in enhancing performance in their research of industrial shippers in Vietnam’s agro-food sectors. In a similar line, Berger-Douce (2014;2015) demonstrates the beneficial effect of Organisation Procedures capability on performance in two case studies performed with a SME. According to Van Echtelt et al. (2008), a corporation can increase organisational performance by creating Organisation Procedures skills that can subsequently be utilised. According to the same rationale, the study by Bridgstock et al. (2010) shows how the organisational performance of social companies is influenced by the strength of their organisational procedures. Similarly, Orishede & Ogbor (2020), in their study, state that policies will have lasting power and can be changedonly through transparent, widely recogenized proceduures, permitting an environment conducive to long term investment.

Relationship between Management Hierarchy and Organizational Performance

According to Mokhtar, Yusoff, and Arshad (2009), management hierarchy is seen as a source of competitive advantage and can play a significant role in determining organisational performance. Market-oriented businesses are better equipped to satisfy consumers because they are able to monitor and react to their requirements and wants (Jaworski & Kohli, 1993). Because it creates an organisational culture that supports providing consumers with higher value (Narver & Slater, 1990; Pelham & Wilson, 1996; Slater & Narver, 1994), a market-oriented business performs better in the market. Customer orientation, competitor orientation, and inter-functional co-ordination are the three interconnected behavioural components that make up a management hierarchy (Narver & Slater, 2000). A company is externally oriented if it regularly gathers and shares information internally about its customers’ rivals and other business stakeholders.

Management Hierarchy is viewed as a significant driver of company performance since market-oriented organisations utilise all functional areas to gain a competitive advantage (Day, 1994). Researchers like Pelham (1999), Appiah-Adu and Rachnod (1998), Slater and Narver (1994), Popwaka (1996), Narver and Slater (1990), Jaworski and Kohli (1993), Slater and Narver (1994), and Kumar et al. (1997) have experimentally discovered a favourable relationship between the degree of Management Hierarchy and organisational performance. Thus, according to Khamwon and Speece (2005), a company that raises its Management Hierarchy would perform better. Positive changes in a firm’s demand and cost curves should follow from strengthening its management hierarchy. Other academics, however, have questioned the connection between management hierarch and organisational performance. Caldor (1971) said that since customers don’t always know what they need, the marketing idea is a poor guide for developing a marketing plan.

Another opponent, Gerken (1990), said that being market-oriented is impractical since businesses can no longer keep up with the unpredictable and ever-changing market trends. According to Bennett and Cooper (1979), customers’ capacity to express their requirements is constrained by their level of knowledge, thus businesses occasionally need to predict the needs and wants of customers in the future. Management Hierarchy, in the opinion of Hayes and Abernathy (1980) and Bennet and Cooper (1979), encourages businesses to focus on immediate and intermediate consumer wants, which may be harmful to organisational procedures and a company’s long-term performance.

METHODOLOGY

The study is a survey, a structured questionnaire was used as the major instrument for gathering primary data, the instrument contains both open-ended and closed-ended questions Responses were evaluated using a five-point Likert scale, where a score of 5 indicated a strong agreement and a score of 1 a strong disagreement. The 150 employees of the selected organisations were used in the study. The Statistical Package for Social Science (SPSS, Version 22) was used to analysed the data collected for the study. Frequency and percentage descriptive statistics were used to analyse the data, while regression analysis was employed as inferential statistics to test the hypotheses of the study in order to established the effect of building blocks on organisational performance.

DATA ANALYSIS

Table 1: Sex of Respondents

Source: field survey 2023.

From the above table 4.1, it shows that (58.3%) of the sample population were male and (41.7%) were female. However, this information shows that there were more male than female respondents.

Table 2: Age Distribution of Respondents

Source: field survey 2023.

The table above shows that 17 respondents, representing 14.2% in the age bracket of 30 years and above while 39 respondents representing 32.5% were between 31- 40 years while 64 respondents representing 53.3% were between age brackets of 41 years and above, which is the highest frequency.

Table 3: Marital Status

Source: field survey 2023.

The table above shows that 69 respondents representing 57.5% were married, 51 respondents representing 42.5% was single. Single has the highest frequency of the sample size.

Table 4: Educational Background

Source: field survey 2023.

The above table shows that 10 respondents representing 7.5% have WAEC/NECO/NCE. 12 respondents representing 10% have OND, 36 respondents representing 30.0% have HND/B.Sc, 35 respondents which represents 29.2% have MBA while other educational qualification was 23.3% which represents 29 respondents.

Table 5: Management Background

Source: field analysis, 2023.

The table above shows that 49 respondents representing 40.8% were top level management which has the highest frequency of the sample size. 38 respondents representing 31.7% were middle level management. While 33 respondents representing 27.5% were lower level management.

TEST OF HYPOTHESES

Ho1_: There is no significant difference between Organization Procedures and organizational performance

H_o2: There is no significant difference between Management Hierarchy and organizational performance

Table 6: Regression Analysis for Building blocks and organizational performance

a. Dependent Variable: Organizational performance

Source: Field Survey (2023).

The result from the regression analysis on table 6 showed that organization procedure exhibited positive effects on organizational performance (β = 0 .262, P > 0.05). Management Hierarchy exhibit positive effects on organizational performance (β = 0 .048, P > 0.05).

Table 9: Model Summary

a. Predictors: (Constant), Organization Procedures, Management Hierarchy,

Source: Field Survey (2023).

Table 4.9 revealed the extent to which building blocks accounted for change in organizational performance as indicated by the adjusted R Squared value which showed that 36.2% (0.362) of the change in organizational flexibility is brought about by the use of building blocks.

Decision rule

The significance value represents the relationship between the independent and dependent variable. Where significance value is ≤ 0.05, accept Ha and reject Ho, but where significance value is 0.05 or greater (>) we accept H0 and reject Ha.

Hypothesis one

H0₁: Organization Procedures does not have a relationship with organizational performance

From the results of the regression analysis on table 6, the calculated level of significance which is 0.002 is less than the p-value of 0.05 i.e. (sig value 0.001 < p value 0.05).  The stated null hypothesis is rejected and the alternate hypothesis accepted which implies that Organization Procedures have positive effect on organizational performance.

Hypothesis Two

H0₂: Management Hierarchy does not have relationship with organizational performance

The results of the regression analysis on table 6, the calculated level of significance which is 0.002 is less than the p-value of 0.05 i.e. (sig value 0.002 < p value 0.05).  The stated null hypothesis is rejected and the alternate hypothesis accepted which implies that Management Hierarchy has positive effect on organizational performance.

Discussion of Findings

The findings of the study based on the regression analysis are discussed thus:

Organisation procedure and Organizational Performance

The results from table 4.9 revealed that there is a significant positive relationship between organisation procedure and organisational performance. The results revealed that there is a significant positive relationship between employee training and organizational performance at 0.000. Also, the model summary table revealed that the r value is 0.613^a. The r squared value of 0.377 depicts a near goodness of fit relationship between organisation procedure and organizational performance. The adjusted r square value on its own part shows 0.362 implies that 36.2% of the variants of organizational procedure used in this study affect organizational performance. The result from the regression analysis showed that organisation procedure exhibit a positive effect on organizational performance (β = 0 .367, P > 0.05).

Management Hierarchy and Organizational Performance

According to table 4.9’s findings, there is a strong positive correlation between organisational performance and management hierarchy. The findings showed that, at 0.002, there is a substantial link between management hierarchy and organisational performance. Additionally, the model summary table showed that r = 0.613a. The r squared value of 0.375 illustrates a close to goodness of fit link between management hierarchy and organisational performance. The corrected r square value of 0.362 alone indicates that 36.2% of the Management Hierarchy variations employed in this study had an impact on organisational performance. Regression analysis results revealed that Management Hierarchy has a favourable impact on organizational performance (β= 0.264, P > 0.05). In accordance with Kohli and Jaworski (1990) posit that by instilling a sense of pride and mutual trust among employees, a Management Hierarchy will enhance an employee’s willingness to make sacrifices for the organization, employee team spirit, the motivation to satisfy customer needs and job satisfaction. In the words of Day, 2009 Market oriented firms draw on all functional areas to create competitive advantage and as such, Management Hierarchy is regarded as an important determinant of business competitive advantage.

FINDINGS

The research examined the effect of Building Blocks on organizational performance. It was discovered in this study that management hierarchy has a considerable effect on organisational performance. The result showed that organisational procedure has a strong beneficial effect on organisational performance. Based on the findings of the study, it became clearer that firms that desire high and sustainable performance must pay adequate attention to appropriate procedures and hierarchy that support the organization corporate objective.

Conclusion

The study concludes that management hierarchy and organisational procedure can favourably affect organisational performance. The result showed that management hierarchy is strong across industry and national boundaries. Businesses need to adapt to the shifting demands and desires of their customers if they wish to prosper in a highly competitive climate. The study finds that management of a firm and its employees can hinder management hierarchy if the organisational culture is not customer-oriented. The internal environment of firms is a significant moderator of the relationship between management hierarchy and organisational performance.

Recommendations

1. Management Hierarchy should be supported by a company’s top management as well as its numerous sections in order to achieve organisational performance.
2. Since a high level of market turbulence necessitates a greater degree of procedural approach, organisational procedure in a highly turbulent environment should be encouraged in order to help enterprises to identify and respond to market changes better

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