Organizational Research Unit VI PowerPoint and DQ Question

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Managerial competencies and organizational structures Karmen Verle, Mirko Markič and Borut Kodrič

Faculty of Management Koper, University of Primorska, Koper, Slovenia, and

Annmarie Gorenc Zoran Faculty of Organisation Studies, Novo Mesto, Slovenia

Abstract

Purpose – The purpose of this paper is to determine whether there is a relationship among leadership, action, social, and personal competencies of managers in modern organizational structure types and whether a relationship exists between a company’s organizational structure and performance. Design/methodology/approach – A questionnaire was carried out among top managers in Slovene mid- and large-sized companies. The relationship among managerial competencies, the choice of organizational structure type and the company effectiveness were measured with a value-added approach. The method of structural models was used for establishing the affect among individual variables. Findings – The results support the hypothesized effect of managerial competencies on a company’s organizational structure type. The effect of a modern, horizontal organizational structure on a company’s performance and growth on the market facilitates the achievement of higher value added as well as has a direct impact of managerial competencies on a company’s performance. Research limitations/implications – The study was limited to mid- and large-sized companies in Slovenia. Only top managers were included in the study as they are the ones that are responsible and have the largest influence in creating a company’s organizational structure. Practical implications – The paper includes implications to those organizations in the process of restructuring and for those companies that are prepared to modify traditional principles of management participation. Originality/value – To the authors knowledge no research studies were found that examined the affect and relation of top management competencies with respect to different organizational structures.

Keywords Knowledge, Top management, Management, Organization, Model, Decision

Paper type Research paper

Introduction Fundamental elements that should lead to business success require continuous monitoring of customers’ expectations and desires, changing approaches to the organization of work and staff that subsequently lead to constant organizational changes (Vermeulen et al., 2010; Biloslavo et al., 2013).

Conditions in turbulent social environments require managers to no longer maintain the illusion of the possibility of predicting the future. Managers can no longer measure, predict, and control organizations in the traditional sense (Ariely, 2010, p. 38). Furthermore, organizations that want to be effective are forced to find their competitive edge outside their own activities, more specifically in the value chains of their suppliers, distributors, and customers. Here stems the need for new organizational structures.

Kaplan and Norton (2006) stress that a company’s performance cannot be measured only with physical and financial measures, but it is much more important how managers are able to connect with intangible assets such as employee knowledge, research and development, and information-communication technology with the needs and desires of buyers. de Waal (2012) emphasizes that a highly successful organization is one that over the long term (5-10 years) achieves better financial and non-financial

The current issue and full text archive of this journal is available at www.emeraldinsight.com/0263-5577.htm

Received 17 January 2014 Revised 6 April 2014 13 April 2014 Accepted 18 April 2014

Industrial Management & Data Systems Vol. 114 No. 6, 2014 pp. 922-935 r Emerald Group Publishing Limited 0263-5577 DOI 10.1108/IMDS-01-2014-0019

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results than its competitors. The author continues to describe 35 indicators to measure performance and according to the results quality of management was listed as the most important indicator. However, there is no increase in a company’s performance without management innovation (Davenport and Prusak, 2000; Krizaj et al., 2012) and this requires new knowledge and skills from those who have the most authority in a company.

Literature review Organizational structures An organizational structure types (hereinafter referred as OST) divides a whole organization into distinct parts and defines the relationships among them. This shows who has responsibility for what, who has authority over whom and who reports to whom (Waters, 2006). The OST defines the chain of command and accountability (Mansoor et al., 2012). Chandler (1979) discusses OST as a tool for the integrated use of existing resources within the organization. Designing the structure of the organization goes beyond the definition of the relationships among parts, but also shows the resources, systems, culture, and other features needed to support the structure (Waters, 2006). An appropriate OST that facilitates and eases coordination of organizational processes is the fundamental factor for achieving set goals of the organization (Mansoor et al., 2012).

Because organizations have to be ever more flexible, innovative, and adaptable, in addition to linked to their environment (i.e. suppliers and customers), organizational structures also are gradually transforming from vertical, hierarchical, functional structures that were suitable for stable and predictable environments, into increasingly more horizontal, team-oriented, adaptable forms (Owen, 2009; Green et al., 2011; Mansoor et al., 2012).There are clear trends in organizations, towards decentralized structures with devolved authority and self-managed groups. These groups are becoming smaller and leaner, with fewer managers, more technology, and increased use of open communications. Probably the largest move is the reduction of boundaries between functions and operations, emphasizing that all parts of the organization should be working towards common goals (Volberda, 1999). Considering this context, the interconnectedness of individual organizational units is becoming increasingly important. Numerous studies have shown that this allows for greater performance of organizations. Organic, flexible organizational structures enable greater employee satisfaction due to increased flow of information, decentralized decision making, decrease in formalization, which together allow for greater innovation and creativity of employees, along with quick responses to changes in the environment (Mansoor et al., 2012). Vermeulen et al. (2010) warn that organizations must not change their structure only when changes within the environment demand it, but they should continuously reorganize even when the environment does not change.

By examining the fundamental characteristics of an organization, it is possible to divide the OST into vertical or horizontal (Cole, 2004; Hatch, 2006). A vertical OST is appropriate for managing an organization’s operations, more specifically, when it is based on vertical hierarchy and when efficiency is especially significant to achieve the scope and objectives of its operation. However, its usage is limited in terms of increasing flexibility and innovation activities. Such a mechanistic OST is most appropriate for large organizations that operate in a stable environment so that it can maximize organizational efficiency and minimize the cost through formalization and central decision making. A mechanistic vertical structure type may result in low level

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employee motivation and satisfaction, namely because it limits individual autonomy (Mansoor et al., 2012). Horizontal OSTs are appropriate whenever there is a need for coordination among core business functions. This type of OST allows for internal differentiation of operations, improved responsiveness to changes in the social environment, and innovation (Yang and Hsu, 2010). An organic horizontal structure results in open communication, increased empowerment, and delegation of authority, which consequently leads to higher performance of an organization and creates a path for innovation (Cole, 2004; Hatch, 2006).

Modern organizational structures have to constantly change to market demands and as a result an increasing number of companies have turned to what are commonly known as “soft” competencies (Goleman, 2006; Yukl, 2010; Wilson, 2010). In modern, flexible, horizontal organizational structures, the role of a leader changes into a role of an administrator who resembles a mentor, a staff coach, guiding and consulting employees at work, one that does not only control and delegate tasks. Satisfaction, loyalty, and staff motivation depends strongly on their superiors that subsequently have an influence on employee innovation and commitment.

Managerial competencies The only constant that defines a company’s success still remains the knowledge and skills of employees. These are dependent upon the knowledge and abilities of managers that can hinder or promote their development, thus, managerial competencies (hereinafter referred as MC) are becoming a crucial factor to the existence of a company (Allredge and Nilan, 2000).

In the literature, a great deal of attention is placed on the concept of MC. This interest has increased with the publication of The Competent Manager by Boyatzis (1982). Boyatzis (1982) presented a programme and a model for discovering MC so that organizations are able to achieve greater performance and success. Many authors (e.g. Boyatzis, 1982; Spencer and Spencer, 1993; Green et al., 2004; Sanghi, 2007; Javidan et al., 2010; Yukl, 2010) cite different competencies that successful managers have developed and collectively emphasize: the ability to create good social relationships; a pronounced desire for achievements as well as the ability for problem-solving, strategic planning, and readiness for change. Measuring competencies are derived from certain basic characteristics that include the following: personal characteristics, motives, skills, knowledge, self-image, cognitive and social skills. Organizational, strategic, and performance results are the consequence of values and cognitive abilities of those who have the greatest power in an organization.

New (1996) links MC to cooperation with others. MC identify a way of how an individual cooperates with other individuals in an organization, whether it is with colleagues, superiors, or subordinates. For this reason, managers should devote time, energy, knowledge, and skills especially to the development and promotion of employees so that subsequently employees will understand the purpose of their work (Allredge and Nilan, 2000; Medlin and Green, 2009). Contemporary conditions require the involvement of managers with investors, government agencies, and with other stakeholders that in principle require effective, transparent, and ethical business activities (Lucier et al., 2007). As almost every task requires cooperation with others regardless of the organizational type or level of an individual’s role in an organization’s hierarchy; MC are a basic requirement for performing most types of work tasks and for this reason we included MC among the key competencies. Whereas a few years ago, managers had to prove themselves with an intelligence quotient and afterwards also

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with an emotional quotient, the present day manager has to excel also on a high action coefficient. Several authors (Gregersen et al., 1998; Black et al., 1999; Amagoh, 2009) emphasize the meaning and role of the commonly known global competencies that contemporary managers should have. Global competencies are comprised of three groups of abilities and skills of an individual manager. The first group of competencies arises from self-awareness, commitment, personal transformation, and inquisitiveness ( Jokinen, 2005). In continuation, Jokinen (2005) emphasizes that it is most important how individuals react in a concrete situation. This depends on the second group of competencies that consist of optimism, social intelligence, empathy, motivation, cognitive skills, and acceptance of complexity and on the third group of competencies that include managerial knowledge, social skills, networking skills, and acquaintances ( Jokinen, 2005).

Alldredge and Nilan (2000, pp. 133-145) separate fundamental, essential, and visionary competencies. Fundamental competencies refer to ethics and integrity, intellectual capacity, maturity and judgement. Essential competencies include customer orientation, developing and motivating employees plus taking care of business results. Under visionary competencies the authors include global perspective, visionary and strategic thinking, nurturing innovation, business alliances and assuring organizational agility.

The purpose of this study is to determine whether there is a statistically significant relationship among leadership, action, social, and personal competencies of managers in modern OSTs. Furthermore the purpose is also to determine whether there is a statistically significant relationship between a company’s OST and a company’s performance that is measured with value added and other indicators of performance.

Research methodology The purpose of the research was to analyse the relationship between MC and the evolution/presence of contemporary horizontal OST and finally how important both phenomena are for a company’s performance.

We found several studies indicating a dependency of organizational structures on numerous factors (external and internal) within the literature review. However, we found no studies addressing the relationship between OSTs and competencies of top management (executives). Thus, considering the focus of our study, already presented theoretical basis and empirical evidence indicating the multi-dimensionality of MC our first challenge was to design a conceptual model that would allow us to address the relationship between MC and OSTs.

On the other hand, when designing the appropriate conceptual model we also considered the empirical evidence addressing the potential impact of contemporary, horizontal OSTs and MC on company’s performance. As a result (see Figure 1), our conceptual model allowed us to address the complexity of relations/interactions among all three categories being investigated, which is: MC, OST, and company performance.

Considering the purpose of the research and presented conceptual model (see Figure 1) the following three hypotheses were defined:

H1. Managerial competencies have a significant impact on organizational structure type.

H2. Organizational structure type has a significant impact on a company’s performance.

H3. Managerial competencies have a significant impact on a company’s performance.

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It should be noted that the hypotheses reflect assumed importance of MC for a company’s performance, namely because the relationship between them is assumed to be direct (H3) as well as indirect through the OST (H1 and H2).

The empirical portion of the study is a quantitative research design, in which data and information were gathered through a questionnaire consisting of five groups of close-ended questions. The first part of the questionnaire referred to the general characteristics of the selected company (company size and age, economic activity, selected financial indicators) and demographic characteristics of its executive manager (gender, age, educational attainment, managerial experiences). The second part of the questionnaire related to the OST and any changes that had occurred within the last five years. The third part of the questionnaire focused on the company’s market performance (customer satisfaction, product quality, innovativeness, market share, and so forth) and growth indicators, determined through theoretical basis and from empirical evidence presented in relevant studies (see Drucker, 2001; Kaplan and Norton, 2006; Owen, 2009; Daft, 2010). The fourth part of the questionnaire assessed to what extent the process-oriented OST has evolved using McCormack-Johnson’s four-category scale (McCormack and Johnson, 2001). The last part of the questionnaire consisted of five-point Likert type questions related to MC that were selected considering the recommendations of Bennis (2009), Blank (2001), Boyatzis (1982), Daft (2010), Goleman (2006), Jokinen (2005), Sanghi (2007), Spencer and Spencer (1993), Yukl (2010), and Wilson (2010).

The survey was carried out with large and medium-sized Slovene companies. Inclusion of small- and micro-sized companies would not be sensible for a study on OSTs, because such companies experience mostly hierarchical, functional structure types or the OST was difficult to define.

Action competencies Accepts challenges and responsibilities

Proactive, encourages and defends change

Leadership competencies

Social and personal competencies Accepts information and ideas Listens, encourages teamwork Is flexible, mobile and creative Has a strong-will Able to empathize with coworkers problems

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Figure 1. Conceptual model of MC, OST, and company performance (i.e. value added)

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After the pilot study was completed and validity was assured, the questionnaire was distributed to 1,537 top managers of mid-sized and large-sized Slovene companies. The questionnaire was sent exclusively to top managers, namely because they have decision-making powers and have a predominant influence on the form of organizational structures (Hamel, 2000).

We started the survey in autumn 2011. After several attempts to obtain a satisfactory return rate, we terminated the survey in spring 2012 with a return rate of only 6.6 per cent (n¼102). The reason for such a low response rate could be attributed partly to the economic situation that companies experienced during the survey, being the reason managers were concerned primarily with liquidity and solvency issues. In addition, the low response rate could be attributed also to the unwillingness of the majority of today’s managers to participate in surveys addressing their personal skills and competencies, which was the main focus of the study.

Data were analysed with several multivariate methods. First, exploratory factor analysis (EFA) was performed to identify common MC. Similarly, EFA was used to identify groups of company’s growth/performance indicators. Second, the results of both EFA were used as an input for confirmatory factor analysis (CFA) performed to define the appropriate measurement model that represented the starting point of structural equation modelling (SEM) used for hypotheses testing.

When specifying the relations among all phenomena being analysed within the SEM, some auxiliary methods also were used (descriptive statistics, ANOVA, discriminant analysis).

Results Among 102 top managers that actually responded to our survey, there were 45 managers of mid-sized and 57 managers of large-sized Slovene companies. These companies were operating within different fields of economic activity: financial and insurance activities, mining, construction, manufacturing, wholesale and retail trade, transportation, professional, scientific, and technical activities, and public administration. However, the majority of them (42 out of 102 or 41.2 per cent) were from the manufacturing business field. Considering the majority of companies were established 50 years or more ago (47.1 per cent), we can consider them being mostly mature companies with long-standing tradition within the fields they operate.

The demographics results reveal that 74.5 per cent of managers were male and 25.5 per cent were female, which is fairly representative of the population. The majority of managers were between 50 and 54 years old (28.4 per cent). With regards to education, 50 per cent of managers had attained a higher education degree, of which 62.7 per cent graduated from the field of social sciences. This reflects that managerial posts require knowledge and skills mainly from the field of economy, management, and human resources. The largest proportion of respondents (23.5 per cent) represented managers with 11-15 years of work experience.

Considering the sample description, we can consider the sample to be fairly representative. With regards to long-standing tradition, the respondents educational background, and their experience, it also can be assumed that the respondents were quite familiar with various OSTs and their characteristics as well as aware of the importance of MC.

The results show that top managers assessed their competencies quite highly. The average score related to the questions addressing MC was higher than 3.6. Statements with higher average scores also had a relatively low variability of responses among

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participants (coefficient of variance was between 13.6 and 17.2 per cent) indicating that top managers participating in the survey were fairly unified regarding their most developed competencies.

We first analysed MC using EFA. Considering the results of the EFA, where the model with two common factors explaining 50 per cent of total sample variance was selected as most appropriate, MC could be grouped into the so called social-leadership competencies and action competencies (associated Cronbach’s a values at 0.940 and 0.884, respectively). However, the major portion of the total sample variance could be explained by social-leadership competencies (45.7 per cent total variance explained).

Even though the questionnaire included separate statements with regards to leadership, social and action competencies, the results of the EFA showed that leadership and social competencies were very closely interrelated and thus should not be considered as independent to each other. Similarly, EFA was performed to identify groups of performance and growth indicators.

The results of the analysis of OSTs indicate that there is still a prevalence of a functional OSTs (46.1 per cent out of 102 participants) within Slovene companies; however a move from functional OSTs to more flexible forms such as product, matrix, and process-oriented structure types could also be identified (in 2011, 47 companies of the 102 had a functional OST in comparison to 2006, when 63 companies of the 102 companies had a functional organizational structure). Even though the presented results would indicate that the respondents considered an OST as being static over a long period and did not consider an organizational structure change as an opportunity for corporate strategy execution, it could be seen at the same time that top managers placed a growing importance to process-oriented OSTs (this could be a consequence of ISO standard implementation, namely because 64 companies out of the 102 adhere to the ISO standard principles).

We assume the prevalence of a functional OST prevented companies from being more responsive to the market situation which resulted in their poor performance. More specifically, the results indicate that 71.6 per cent of participating companies faced lower than h40,000 of value added per employee. Evidence from our survey indicating significantly higher economic performance of companies being organized more horizontally, non-hierarchically (project, matrix or process-oriented OSTs), in comparison with companies organized traditionally, hierarchically (functional, product-oriented OSTs), also supports our assumption that contemporary organizational structures enable increased flexibility and greater responsiveness to user’s demands.

In order to identify important determinants of the OST we also conducted a discriminant analysis. All organizational data types were classified into two groups, where the first represented more horizontal, non-hierarchical structures (project, matrix or process-oriented OSTs), whereas the second group consisted of more traditional, hierarchical structures (functional, product-oriented OSTs). Independent variables taken in consideration were social-leadership and action MC (estimated within EFA) and dummy variables related to companies’ economic activities.

The results of the discriminant analysis indicate the significant relation between OST and MC. On average these were more evolved among managers of companies where contemporary, horizontal, non-hierarchical organizational structures were present. In addition, the relation between OST and field of economic activity turned out to be significant as well. Horizontal, non-hierarchical organizational forms were more common within the field of professional, scientific, and technical activities and transportation, but less frequent within manufacturing companies.

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Considering the presented evidence related to MC, OSTs and companies’ performance we continued the analysis with SEM technique to test the conceptual model (see Figure 1) along with the associated hypothesis.

Structural equation model Based on the conceptual model (see Figure 1) and already presented results from EFA and discriminant analysis, we defined the following latent variables within our structural equation model:

. action and social-leadership competencies;

. market performance and growth of sales;

. OST (vertical vs horizontal organizational structures); and

. economic activity (mining and manufacturing vs service industries).

Following the proposal of James et al. (1982) we decided for a two-step modelling approach. In the first step, CFA was performed to estimate and test the measurement model. Once the measurement model was verified, we continued with the estimation and testing of the structural model. After several stages of model estimations, testing and model modifications we managed to obtain an acceptable model fit. The results of the SEM are summarized in Table I and displayed in Figure 2, whereas the model-fit indices are summarized in Table II.

Hypothesis testing According to the estimate of the coefficient of determination, 23.6 per cent of the variance of OST can be explained by social-leadership competencies and the company’s economic activity. Both structural coefficients are highly significant, whereas action competencies were found not to have a significant impact on OSTs. However, the results should be taken with care, because previous correlation analysis indicated strong correlation between both groups of competencies and inclusion of both groups of competencies as predictor variables in the first structural equation would actually cause multicollinearity issues. H1: MC (action, leadership, and social) have a statistically significant impact on the OST can thus be accepted on the basis of the afore-mentioned statements.

Factors

Organizational structure ¼ 0.330�Social competencies þ 0.166�Activity SE (0.0826) (0.0593) p-values 0.000 0.005 R

2¼0.236 (error variance¼0.157) Market performance ¼ 0.446�Organizational structure þ0.628�Action competencies SE (0.122) (0.128) p-values 0.000 0.000 R

2¼0.477 (error variance¼0.204) Growth of sales ¼ 0.761�Market performance SE (0.129) p-values 0.000 R

2¼0.260 (error variance¼0.620) Table I.

Structural equations

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The second structural equation helps to understand the determinants of a company’s market performance being measured with selected indicators of customer satisfaction, product quality, innovativeness, market share, and so forth. Coefficient of determination (0.477) in the second equation depicts that 47.7 per cent of variance of market performance could be explained by OST and leadership action competencies with a stronger influence towards action competencies. Both structural coefficients are highly significant indicating that leadership action competencies and OST are important determinants of a company’s market performance, which confirms our assumptions.

Considering the third structural equation none of the examined factors (competencies and OST) had a statistically significant direct impact on growth of sales; however, they did have an indirect impact through market performance. The latter had a statistically significant impact on a company’s growth of sales, although its influence can only explain 26 per cent of variance of growth of sales. H2: OST has a statistically significant impact on a company’s performance, can also be accepted. A statistically significant direct impact of OST on market performance and indirect impact on the growth of sales (through market performance) indicates the assumed importance of OST for corporate strategy execution and long-term success.

H3: MC (action, leadership, and social) have a statistically significant impact on a company’s performance can be accepted as well. A statistically significant direct impact on market performance and indirect impact on growth of sales could be attributed to action competencies. For social-leadership competencies only the indirect impact through OST has been identified. However, considering the evidence indicating strong correlation between both groups of competencies it is actually difficult to differentiate between them and so both groups of competencies could be considered an important determinant of a company’s success.

A vast number of tests and fit indices exist for assessing model fit. One of the widely known goodness-of-fit measures is w2 test, where the null hypothesis states the implied covariance matrix is equivalent to the observed sample covariance matrix. However, several authors ( Jöreskog, 1969; Brown, 2006) consider w2 test as problematic, namely because it is sensitive to sample size and violation of distributional assumptions.

Indicator Value (our model) Acceptable fit

Satorra-Bentler w2 138.537 Lower values are preferred (Hoe, 2008) Degrees of freedom 146 Level of significance w2 0.657 40.05 Relative w2 0.982 o2 (Kline, 1998; Ullman, 2001; Tabachnick and

Fidell, 2001) RMSEA 0.0000

(0.0000; 0.0435) o0.05 (Steiger, 1990) o0.06-0.08 (Schreiber et al., 2006) o0.08 (Browne and Cudeck, 1989)

NFI 0.941 40.95 (Schumacker and Lomax, 2004) X0.95 (Schreiber et al., 2006)

CFI 1.000 40.85 (Bollen, 1989) X0.95 (Schreiber et al., 2006; Hu and Bentler, 1999)

GFI 0.871 X0.95 (Schreiber et al., 2006) 40.90 (Hooper et al., 2008)

AGFI 0.832 X0.95 (Schreiber et al., 2006) 40.90 (Hooper et al., 2008)

RMR 0.0577 0 indicates perfect fit (Schreiber et al., 2006)

Table II. Model fit indices

and associated recommended values

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In addition to the classic w2 test many alternative fit statistics have been developed (e.g. root mean square error of approximation (RMSEA), comparative index (CFI), TLI, goodness-of-fit index (GFI), adjusted goodness-of-fit index (AGFI), normed-fit-index (NFI), and so on); however, each of them has its own advantages and disadvantages. Different authors also suggest different acceptable values of individual indices, which indicate that there are no unified goodness-of-fit measures. For this reason, authors (e.g. Schumacker and Lomax, 2004) advise on the use of a combination of different indicators. Among the vast selection of goodness-of-fit measures, we chose the Satorra-Bentler w2 (considering that the multivariate normal distribution could not be confirmed), RMSEA, NFI, CFI, GFI, AGFI, and RMR (see Table II). With the exception of GFI and AGFI values, other fit indices are mostly acceptable (see Table II), which indicates an acceptable model fit. The acceptable value of GFI and AGFI should be 0.95 considering recommendations by Schreiber et al. (2006). Whereas Hooper et al. (2008) suggest 0.90 as an acceptable minimum value for both indices. The calculated values in our model were slightly lower, however considering other indices and especially the limitation of a relatively small sample size, we considered the model fit as acceptable and can conclude that the evaluated structural model is in congruence with the theoretical (conceptual) model that determines the relationship among competencies, OST, and company performance.

Discussion The model in this study was developed for the purposes of this research and together with the hypotheses, we found: important impact of MC on OST; the effect of a modern, horizontal OST on a company’s performance and growth on the market that enables the achievement of a higher value added, as well as a direct impact of MC on a company’s performance. MC have been studied by several authors who noted a lack of skills and competencies of contemporary managers (Horne and Steadman Jones, 2001; Porter and Ketels, 2003; Charlesworth et al., 2003). In addition, various research studies show a significant influence of MC on a company’s performance, which is seen in increased employee morale, greater responsibility and flexibility of management, quality improvement, greater loyalty towards customers, and readiness for new business opportunities (Mabey and Ramirez, 2004; Hau and Thum, 2010; Nienaber, 2010). Furthermore, our research study revealed a statistically significant direct impact of action competencies of top managers with regard to performance on the market. This was measured through customer satisfaction and a statistically significant indirect impact of action competencies of top managers on sales and revenues growth through the factor of performance on the market.

This study also showed that in Slovenia traditional (hierarchical) forms of planning, organizing, managing, and supervising prevail, even though research studies by McCormack and Johnson (2001) along with Benner and Tushman (2003) show a pronounced connection between process (horizontal) OST and performance of an organization. Findings by Hamel (2000) and Coy (2007) discuss that the majority of organizations are still organized on the principles of “scientific management” that was founded by Taylor and popularized by Ford more than 100 years ago.

The limitation of the research can be attributed to the potential bias resulting either from the sample selection or the use of survey-based data collection method. However, considering the evidence indicating that managerial self-assessed competencies were more evolved among managers of companies being organized more horizontally, non-hierarchically (project, matrix or process-oriented OSTs) and

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considering the identified positive relation between MC and company’s performance the bias should not be large.

The results of this research study provide possibilities for further studies. For example, it would be interesting to compare the self-assessment of MC with the assessment of their competencies given by their subordinate employees. It also would be useful to study in-depth to what extent a company is aware of the importance of MC and how much investment is placed on management development. The research study showed that MC are not associated with age, gender, education orientation, and work experience; hence, it would be interesting to research indicators that determine MC or factors that separates more successful managers from their less successful colleagues.

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About the authors

Dr Karmen Verle is a Senior Lecturer of Management at the Faculty of Management Koper, University of Primorska.

Dr Mirko Markič is a Professor of Management at the Faculty of Management Koper, University of Primorska.

Dr Borut Kodrič is an Assistant Professor of Research Methodology at the Faculty of Management Koper, University of Primorska.

Dr Annmarie Gorenc Zoran is an Associate Professor at the Faculty of Organisation Studies in Novo mesto. Dr Annmarie Gorenc Zoran is the corresponding author and can be contacted at: [email protected]

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