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Academy of Management

The differentiation process involves differentiation of
operational and managerial activities. Differentiation of operational activities is
realized through division of labour, or in other words, job design, and it results
Economic Annals, Volume LVIII, No. 198 / July – September 2013
in the organization’s specialization level. Differentiation of managerial activities
determines who decides on what, and results in a certain level of centralization
or decentralization of authority within the organization. Integration is realized
in unit grouping and coordination. Unit grouping, or departmentalization,
implies structuring of activities and tasks into organizational units, and it can
be based on input (functional), output (market or project), or a combination of
the two (matrix). Individual and group activities and tasks in an organization
are harmonized by coordination, in order for it to function as a unified whole.
Coordination can be achieved through five basic mechanisms: direct supervision,
mutual communication, process standardization, output standardization, and
knowledge standardization Differentiation and integration
in organizational structuring therefore imply four essential dimensions of
organizational structure: job design, delegation of authority, unit grouping, and
coordination. These dimensions of organizational structure are congruent, which
means that there is harmony or concordance between them. Presumption of
congruency is fundamental for the concept of organizational structuring t assumes that congruency or
harmony as dimensions of the organizational structure leads to better performance
of the organization. In order for an organization to be successful it has to provide
mutual congruency of the dimensions of its own organizational structures. This,
then, leads to the formation of configurations of congruent structural dimensions,
which is just a different name for models of organizational structure. An
organizational model is actually a unique configuration of congruent structural
dimensions: a certain level of specialization and (de)centralization levels, a
certain unit grouping mode, and a certain coordination mechanism. The most
prominent classification of models of organizational structure as configurations
of structural dimensions has been provided
and it will be used in this paper.