Organizational Structure and Logistics Service Innovation

Purpose- Objective of this paper is to analyze, how different factors related to organizational structure named as decentralization, formalization, and specialization impacts innovation capability of an organization in its logistics services. Methodology- Proposed conceptual model consists of combination of Strategy-Structure-Performance (SSP) and Resource Based View (RBV) of the firm. Data were collected from textile sector of Pakistan and structure equation modeling was performed to check the hypothesized relationships. Findings- According to this research decentralization and formalization has a positive effect on organizations’ innovation capability in its logistics service, though it was proposed that formalization has negative impact on organization’s innovation capability, but in results it showed a positive relationship. Specialization was not a good predictor according to our findings. Results also showed a positive relationship between organization’s innovation capability in its logistics service and market performance. Research limitations or implications- To ensure the internal consistency data were collected from textile sector of Pakistan, so necessary precautions must be taken while interpreting and implementing the results of this research. Moreover fewer constructs has been used to check the relationships between different variables. In future more constructs should be added accordingly. Practical implications- In today’s intense competition service is the key differentiator among different firms. A firm by focusing on internal controllable factors and some external factors can built innovation in its logistics services, which can differentiate firm from its competitors and can give competitive edge to the firm. Value- Current study makes a little but valuable addition to the knowledge base in the context of innovation in logistics services.