Ownership, size, and the formal structure of organizations: evidence from US public and private firms, 1992--2002

This study considers the effects of (i) ownership structure, (ii) prior size dynamics of growth and decline, and (iii) organizational size on changes in the formal structure of organizations. Using a broad sample of almost 70,000 US public and private firms, I test the arguments by estimating conditional logistic regressions using as dependent variables two dimensions of organizational structural differentiation: the number of formal subunits and hierarchical levels. The findings show that public firms are more likely to elaborate structurally, but less likely to simplify their structural differentiation. As organizations grow/decline in size, they apparently tend to increase/decrease their degree of structural differentiation. However, for a given change in size, the level of structural differentiation is less likely to increase during growth than it is to decrease during decline, indicating an asymmetric pattern. I also find that organizational size can serve as a facilitator or inhibitor for structural change, depending on the direction of change. Finally, I find that the asymmetric pattern of growth and decline works differently for large and small firms. The same proportional increase in size is more likely to generate structural differentiation for larger firms than for smaller firms. But the same proportional decrease in size has a smaller likelihood of causing structural de-differentiation for larger firms than for smaller firms. Copyright 2009 The Author 2009. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.