How does organizational structure influence performance through learning and innovation in Austria and China

The purpose of this paper is to investigate the relationship between organizational structure and performance, especially through organizational learning and innovation, based on evidence from Austria and China.

Based on the literature and hypothesis, a theoretical, conceptual and structural equation model is set up through a questionnaire survey and sample of about 90 Austrian and 71 Chinese samples. Partial least squares were used in the analysis and the results are tested by bootstrap methods.

The findings reinforce the important infrastructure position of organizational structure on performance. First, organizational structure has more effects on organizational learning than on innovation, organizational learning has an indirect effect on performance through innovation, except the direct effect of structure on performance. Second, managers in Austria think structure has a more important effect on performance; both managerial and technical innovation influence performance, managerial innovation is not significant in China. Austrian companies prefer structural‐oriented innovation whereas Chinese prefer learning‐oriented innovation. Third, in a hi‐technology or knowledge intensive industry, organizational structures affect organizational performance mainly through innovation and organizational learning. But in traditional industry, such as labor‐ or capital‐intensive industry, organizational structure impacts organizational performance mainly through innovation. Fourth, for younger firms, learning is important in the relationship of organizational structure with performance, but in older firms, innovation is the mediator for structure on performance. Finally, senior managers think organizational structure improves performance directly and through innovation. But the middle and junior managers think organizational learning has an important mediating effect on performance.

The paper shows that innovation is a more important mediating variable in the influence of organizational structure on performance. Innovation needs to be encouraged at the strategy level instead of at the implication level.