International Journal of Research and Innovation in Social Science (IJRISS) | Volume III, Issue X, October 2019 | ISSN 2454–6186

Effect of Organizational Structure on Company Performance in Manufacturing Industry

Muhammad Donal Mon

Fakultas Ekonomi, Universitas Internasional Batam (UIB), Indonesia

Abstract: – The manufacturing industry is the leading sector that contributes the most to Indonesia’s economic growth. In 2016, the contribution of the manufacturing industry to Indonesia’s Gross Domestic Product (GDP) was 20.51 percent, in 2017 the industry’s contribution to the national Gross Domestic Product (GDP) was 20.16 percent based on these data, there was a decrease in contribution to national GDP. This research is to see the effect of complexity, formalization, nature of hierarchical and technology on company performance. Collect data using a questionnaire, in order to measure how much influence the organizational structure has on the firm performance. Data is processed using the SPPS program. The results of the analysis show that the organizational structure for complexity and nature of hierarchical variables has a positive but not significant effect while formalization and technology have a positive and significant effect on firm performance. Furthermore, adjusted R square obtained at 59.1% is influenced by the four variables, the other 40.9% is the contribution of other variables not included in this study.

Key Words: Complexity, Formalization, Nature of Hierarchical, Technology Firm Performance

I. INTRODUCTION

Batam Exploitation Agency (BP) is targeting Batam economic growth in 2019 to be above 7 percent, while the economic growth of Batam city in 2018 is targeted at 5%. Batam economic growth in June 2018 only reached 4.47% and this is better than the previous year. The low economic growth of the city of Batam is caused by a number of factors including industrial growth in which there was a negative contraction and a decline, especially in the computer industry, electronic goods, and optical goods which fell by 10.70% (BPS, Riau Islands 2018).