Implications of Organizational Structure for International IT Companies

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Sapient: Implications of Organizational Structure for International IT Companies – Contingency Theory and Supportive Tools

Table of Contents

Table of Contents2
1)Contingency theory4
1.1)Structure and Strategy4
1.2)Structure and Environment5
1.3)Evaluating the Contingency Theory5
2)Bartlett and Ghoshal’s Grids6
2.1) The Integration-Responsiveness (I-R) Grid - Four generic strategies6 2.1)The Contingency Cobweb and Telescope Grids8
2.2)Evaluating Bartlett and Ghoshal’s Grids9
3)The Theoretical Frameworks: Do They Apply to the Service Sector?10 PART II: APPLICATION OF THEORY12
1)Sapient Case Introduction12
1.1)The move into WWW13
1.2)The dot com boom... and the bust13
1.3)Get out of the bust - the push to profitability14
1.4)Sapient’s strategy nowadays15
2)Sapient Evolution through Chandler16
3)Sapient Evolution through Lawrence and Lorsch (L&L)18 4)Sapient’s Evolution through Bartlett and Ghoshal19


Since the last two decades, we have seen a high infiltration of information technology into modern day businesses. As computing hardware became more affordable and as the businesses grew in complexity, it both necessitated and facilitated the birth of the IT industry. It was not long, before the revolution in Internet Technologies altered the industry structure to become what we today know as Information Technology & Communications industry (IT).

Nowadays, IT industry is becoming increasingly competitive. Moreover, the fact that rapid technological developments are always changing the favorite or “in-demand” technologies of the sector, leave a strong sense of uncertainty for the players in this industry. This highlights the need for flexibility for IT organizations, and sends out a caveat to all the mechanistic players in this or other dynamic innovative technological markets. IT players need to be ready to embrace a new technology, a new competitor, and sometimes even a new business model.

To be able to sustain in an unstable, turbulent and ever changing external environment, it becomes critical that a firm is able to strategically reshape itself in order to tackle forthcoming contingencies. To reiterate this relationship between organizations and their environment, we cite Burns & Stalker (1961, The Management of Innovation) in which they postulate that the organic form (an organization with a flexible structural design) is conducive to a firm operating in an environment with rapidly changing conditions: “The organic form is appropriate to changing conditions, which give rise constantly to fresh problems and unforeseen requirements for action which cannot be broken down or distributed automatically arising from the functional roles defined within a hierarchic structure.”

The purpose of this paper is to evaluate to what extent external conditions have an influence on firms’ strategy and structure, in an international environment, with a special focus on the IT industry. To achieve our goal, in the absence of a theory encompassing the whole topic, we worked out a theoretical framework, developed in the first part of the paper, drawing from different theories and studies on the subject. At first, the interdependence between structure and strategy will be assessed, through the framework provided by Chandler (1962); next, the focus will shift to the connection between structure and environment, analyzed through the theory developed by Lawrence & Lorsch (1967) and Ghoshal & Bartlett (1989). Subsequently, in the second part of the paper, we evaluate the evolution of Sapient Corporation in the light of the theory presented, assessing the extent to which such frameworks help us understand the company’s strategic choices.


Contingency theory

1 Structure and Strategy

As a starting point...
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