The Empirical Study About The Relationship Between Organizational Complexity And Firm Performance

Traditional firm management theory considered the different performance among different enterprises as the result of "endogenesis dynamics", such as the theory of industrial organization designated business performance as a fuction of corporate behavior. RBV considered that unique, scare resources and ability could bring high performance. Organizational Management theory attributed the performance to corperate governance, strategic management and operations management. The complex business environment as "exogenous" failes to form an effective explanation theory. However, with the development of global economy, environment for the survival of Chinese enterprises has become increasingly complex, the complexity of environment can not be ignored. So, this study discover how to manage the complexity to create the competitive advantage will have significance.This study proposes three hypothesizes about the relationship between organizational complexity and firm performance, the relationship is inverted U curve between them. In this paper, we control the complexity of environment variables, with the use of 20 Chinese listed companies data. The research confirms three hypothesizes, and finds the inverted U curve. The best performance company of the inverted U cure has close degree of organizational complexity. Company will have the best performance when organizational complexity fitting with the environment complexity.From the study results,20 companies can be divided into three levels, each level has the similar characteristics. The level which has the best performance includes 7 companies,these companies and their controlling shareholders have operated a long time in the industry. This level companies which controlling shareholders are domestic non-state owned corporations have excellent resources and management capacity, and these promote to get good performance. The second level includes 10 companies, most of them established in the begin of the real estate industry, and had less experience. State-owned holding corporations gave them some resources, at the same time, limited their management.The third level has 3 companies, they are short of experience and resources, therefore they have the worst performance.The results of this study showed that Survival and development of enterprises can not escape the impact of exteranl environment. The enterprises must learn to manage complexity, and find the way to make organizational complexity fitting with the environment complexity.