Return on Assets Loss from Situational and Contingency Misfits

Management Science, Vol. 48, No. 11, pp. 1461-1485, November 2002

Posted: 2 May 2006

See all articles by Borge Obel

Borge Obel

Aarhus University - ICOA

Rich Burton

Duke University - Fuqua School of Business

Jorgen Lauridsen

Centre of Health Economics Research, Department of Business and Economics; University of Southern Denmark - Department of Business and Economics

Abstract

We develop a rule-based contingency misfit model and related hypotheses to test empirically the Burton and Obel (1998) multicontingency model for strategic organizational design. The model is a set of "if-then" misfit rules, in which misfits lead to a loss in performance; they are complements to the strategy and organizational contingency theory fit rules. Using data from 224 small- and medium-sized Danish firms, misfits are categorized and identified. Then, performance hypotheses are developed and tested using regression models.

We confirm the hypotheses that firms with situational misfits or contingency misfits, or both, incur performance losses in return on assets compared with firms with no misfits. Contrary to our hypotheses, we did not find that additional misfits lead to increased performance loss.

Our results suggest that just one misfit of any kind may significantly compromise performance.

These results yield a deeper understanding of organizational contingency theory, as well as implications for the rule-based fit-misfit organizational design model.

Keywords: Misfit, Contingency Theory, Organizational Design, Complexity Theory, Strategy Implementation

JEL Classification: L20

Suggested Citation

Obel, Børge and Burton, Richard M and Lauridsen, Jorgen and Lauridsen, Jorgen, Return on Assets Loss from Situational and Contingency Misfits. Management Science, Vol. 48, No. 11, pp. 1461-1485, November 2002, Available at SSRN: https://ssrn.com/abstract=899320

Børge Obel (Contact Author)

Aarhus University - ICOA ( email )

Fuglesangs Alle 20
Aarhus, DK-8210
Denmark

HOME PAGE: http://www.icoa.dk

Richard M Burton

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

Jorgen Lauridsen

Centre of Health Economics Research, Department of Business and Economics ( email )

Faculty of Social Sciences
Campusvej 55
DK-5230 Odense M
Denmark

University of Southern Denmark - Department of Business and Economics ( email )

DK-5230 Odense
Denmark

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