* Structural dimensions of the firm:
Structural dimensions deals with propensity to innovate and effectiveness at innovation. It includes the following terms:
Formalization:
It is the degree to which the firm utilizes rules, procedures, and written documentation to structure the behavior of individuals or groups within the organization. KFC, McDonalds etc., are well known to the world. To maintain their level over the top they follow set of rules and procedures in preparing their recipes, storing them and serving to people. Following these rules and procedures helps the organization to regulate employee behavior by providing clear expectations of behavior and decision making.
Standardization:
It is the degree to which the activities are performed in a uniform manner. It ensures the quality levels are met. Standardization is similar to that of a benchmark. KFC or McDonalds have many number of branches all over the world. If any branch does a mistake in some process, then whole unit (KFC or McDonalds) has to face the consequences. Hence, each and every branch has to follow the uniform rules and procedures which we call standardization. To be on the top, organizations have to maintain high level standards. This may limit innovation which doesn't mean that organizations cannot be creative.
Centralization:
It is the degree to which decision-making authority is kept at the top levels of the firm. In this type of organizations employees do not have authority over the work they do. The whole power to make decisions lies in the top management. For example, consider Indian government at state levels, even if a problem/issue exists at a small and tiny area the top government has to make a decision to get that problem cleared. It is a time taking process. In this case, officials at lower level do not have the right to solve the problems using government funds. It