Enhancing organizational structure performance: the mediating influence of absorptive capacity in response to the external environment

Purpose Integrating theories of environmental and organizational design, this purpose of this study to examine the mediating effect of a firm’s absorptive capacity (ACAP) on the relationship between external organizational environment and internal organizational structure. Design/methodology/approach The authors investigate a data set of 347 multisectoral industrial firms in South Korea. The results from composite-based structural equation modeling (CSEM) analysis support the mediating effect of ACAP in external organizational environment – internal organizational structure link. Findings The findings underscore the positive impact of both the external environment and ACAP on the internal structural aspects. Furthermore, the authors reveal that ACAP serves as a crucial mediator in the relationship between the external environment and characteristics of the internal organizational structure. Practical implications This study offers a unique perspective, focusing on the intricate connection between the external organizational environment and internal organizational structure, while concurrently exploring the mediating role of ACAP in aligning internal structural attributes with external environmental conditions. Originality/value This paper focuses to build and test an integrated model to examine the association among external organizational environment, internal organizational structure and ACAP. Furthermore, this study simultaneously assesses the mediating role of ACAP on the fit between external environmental conditions and internal organizational structure. This focus is considered as the main theoretical and empirical contribution of this study.