Contingency Fit, Institutional Fit, and Firm Performance: A Metafit Approach to Organization–Environment Relationships

Henk W. Volberda, Niels Van Der Weerdt, Ernst Verwaal, Martin Stienstra, Antonio J. Verdu

Research output: Contribution to journalArticle

64 Citations (Scopus)

Abstract

In this paper, we attempt to reconcile contingency and institutional fit approaches concerning the organization-environment relationship. While prior scholarly research has examined both theories and compared their impacts on organizational fit and performance, we lay the groundwork for a meta-fit approach by investigating how contingency and institutional fit interact to influence firm performance. We test our theoretical framework using a dataset of 3,259 respondents from 1,904 companies regarding task environmental demands and institutional demands on organizational design across a broad range of industries and firm size classes. Our results show that contingency and institutional fit provide complementary and interdependent explanations of firm performance. Importantly, our findings indicate that for firms under conditions of “quasi-fit” rather than perfect contingency fit or optimal institutional fit, improvements in contingency and/or institutional fit will result in better performance. However, firms with high contingency fit are less vulnerable to deviation from institutional fit in the formation of firm performance, while firms with perfect institutional fit will slightly decrease their performance when they strive to achieve contingency fit.
Original languageEnglish
Pages (from-to)1040-1054
Number of pages15
JournalOrganization Science
Volume23
Issue number4
DOIs
Publication statusPublished - Jul 2012

ASJC Scopus subject areas

  • Management of Technology and Innovation
  • Strategy and Management
  • Organizational Behavior and Human Resource Management

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