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  • The fact that ownership forms differ suggests that the way

    2018-11-06

    The fact that ownership forms differ suggests that the way the principals will organize their firms may differ based on the ownership structure. One pointer to this is that Chua et al. (2009) in their study of family firms found that the structure of family firms vary from that of non-family firms. The fact the owners of architectural firms are often not trained in organizational management, yet they manage their firms personally, may also suggest that the characteristics of owners may influence firm structure. Previous studies have found a correlation between managers\' characteristics and firm performance. For example, Hitt et al. (2001) and Pennings et al. (1998) found that education and experience of managers influenced firm performance. Within the construction industry, Fraser (2000) and Kim and Arditi (2010) found that the educational level, involvement in continuing education, number of firms worked for, membership of professional bodies, and leadership cathepsin inhibitor influenced the performance of construction firms. With architectural firms, however, these managers are often the owners and the relationship may differ. It may therefore be worthwhile to investigate the relationship between ownership characteristics and structure of firms and the attendant individual and combined effects on the performance of architectural firms. The foregoing discussed studies on the influence of ownership characteristics and performance as well as ownership characteristics and structure. In addition to these relationships, however, a number of factors have been hypothesized to moderate the relationship between ownership and performance. One of such factors is number of hierarchical levels (Durand and Vargas, 2003). Greenwood and Empson (2003) suggested that formal hierarchies and bureaucratic controls are unlikely to succeed in a professional service firm because the professional staff is expected to have autonomy and freedom to perform well. They suggested that the partnership and private corporation professional service firms would perform well because they use collegiate rather than hierarchical controls. This suggests that flatter hierarchies may outperform multi-layered ones. Hierarchy is an aspect of structure that represents the level of centralization of decision-making in architectural firms. This is an aspect of structure defined by Willem and Buelens (2009) as the extent to which decision-making power is concentrated in top management level of the organization. Pertusa-Ortega et al. (2010) suggested that decentralization involving the distribution of authority fosters the incorporation of a greater number of individuals in the management of the organization. They suggested that decentralization enables members of organizations to act autonomously, thereby fostering better business opportunities. On the contrary, centralization reduces generation of creative solutions as experimentation and circulation of ideas are reduced. Going by seed observation, one would expect that high centralization would lead to poor performance in creative firms such as architectural firms. Structure, according to Zhou and De Wit (2009), is the way in which an organization organizes and coordinates its works. In addition to centralization, other dimensions of structure are formalization and specialization. Specialization has been referred to as complexity by Pertusa-Ortega et al. (2010), and departmentalization by Zhou and De Wit (2009). It is the extent to which organizational tasks are divided into subtasks and people are allocated to execute only one of these subtasks. High-level specialization exists when each person performs only a limited number of tasks, while low-level specialization implies that people perform a range of different and frequently changing tasks. Formalization, on the other hand, is the extent to which the rights and duties of the members of the organization are determined and the extent to which these are written down in rules, procedures, and instructions. Architectural firms are professional service firms where professionals have autonomy on aspects of the work under their control, according to Mills et al. (1983). This suggests that decision-making in such organizations is decentralized. However, a high degree of specialization of duties and formalization of office procedures may exist. These have yet to be proven empirically.