Impacts of Competitive Pressure and Organizational Context on Organizational Structure: A Role of Knowledge Management

Recent trends in academia and the business community have seen a shift in focus in knowledge management (KM) issues from technology adoption to the interplay between organizational and technology management, with a special interest in the integration of KM technology and organizational design. Organizational structure is fundamental in this exploration as it encapsulates how an enterprise manages knowledge, communicates, allocates decision-making power, and implements control mechanisms, thereby portraying the efficacy of an organization’s operations. This study aims to formulate and test a theoretical model based on the Organizational Knowledge/Information Processing Model, examining the relationships between environmental pressure, organizational innovativeness, KM technology, organizational size, centralization, and formalization. Using a structural equation modeling approach, the study analyzed survey data collected from 220 companies to explore how these variables interact and influence each other. The analysis revealed that in response to competitive pressure, organizations primarily employ KM systems, centralization, and formalization. Additionally, KM systems were found to act as mediators, enhancing both centralization and formalization within the organizations. The study concludes that competitive pressure drives organizations to adopt KM systems, which in turn facilitate increased centralization and formalization. This highlights the critical role of KM technology in shaping organizational structure and processes, ultimately impacting the effectiveness of organizational operations.