The distinct characteristics of services imply a need for different approaches to establishing a fit between organizational structure and strategy. Because of the importance of the customer-employee interaction for the performance of service organizat...
The distinct characteristics of services imply a need for different approaches to establishing a fit between organizational structure and strategy. Because of the importance of the customer-employee interaction for the performance of service organizations, it is argued that an attempt to identify an appropriate fit between strategy and structure should be based on a deep understanding of the nature of that interaction. A conceptual framework is developed that provides a basis for establishing a fit among strategy, structure, and service task for service organizations. Five dimensions of the customer-employee interaction are related to strategy and structure. The paper challenges the common argument for a flexible organizational structure of service firms by indicating that centralized organization could perform better for some services.