Successful organizations must ensure that they have the proper type of organizational structure. Furthermore, they must ensure that their firms incorporate the necessary integration and processes so that the internal and external boundaries of their firms are flexible and permeable. This is increasingly important as the environments of firms become more complex, rapidly changing, and unpredictable.
In the first section of the chapter, we addressed the different types of organizational structure—simple, functional, divisional (including two variations—strategic business unit and holding company), and matrix as well as their relative advantages and disadvantages.
The second section of the chapter introduced the concept of the boundaryless organization. We did not suggest that the concept of the boundaryless organization replaces the traditional forms of organizational structure. Rather, it should complement them. This is necessary to cope with the increasing complexity and change in the competitive environment. We addressed three types of boundaryless organizations. The barrier-free type focuses on the need for the internal and external boundaries of a firm to be more flexible and permeable. The modular type emphasizes the strategic outsourcing of noncore activities. The virtual type centers on the strategic benefits of alliances and the forming of network organizations. We discussed both the advantages and disadvantages of each type of boundaryless organization and suggested some techniques and processes that are necessary to successfully implement them. These are common culture and values, horizontal organizational structures, horizontal systems and processes, communications and information technologies, and human resource practices.
