Enhanced Organizational Performance: History
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Contributor:
Jorge Aníbal Restrepo-Morales
,
Emerson Andrés Giraldo-Betancur
,
Diego Alejandro López-Cadavid
,
Martín Manuel Grados-Vásquez
,
Lucio Wilfredo Olórtiga-Cóndor

In the vast landscape of the global economy, small- and medium-sized enterprises (SMEs) stand as foundational pillars. Their significance in this nation stretches beyond mere economic contribution into job creation and sociocultural enrichment. There is a growing imperative to understand the multifaceted influences, notably the environmental, human resources, managerial, technological, and innovation factors that underpin SME performance, considering that organizational performance is defined by the organization’s ability to achieve its goals and objectives.

  • organizational performance
  • SMEs
  • environmental factors
  • organizational management
  • innovation
  • structural factors
  • sustainable development

1. General Systems Theory

General systems theory (GST), proposed in [1] more than half a century ago, has proven to be a valuable tool for analyzing and understanding organizations and promoting a holistic and systemic approach to business management [2]. This approach has gained wide acceptance in various fields of study, including organizational management, where its application has been documented in numerous studies and desk reviews [3]. GST has enabled an evolution of the traditional organizational concept from the mechanistic vision of classical theory, in which a company was viewed as a closed system dedicated solely to generating profits, to a modern approach, wherein the company is seen as a complex entity that interacts formally and informally with its immediate and external environment [4].
According to this logic, companies not only actively participate in the propagation or perpetuation of problems in the world but also constitute economic actors who can contribute to solving the problems that arise in their environment. In this light, systems thinking as defined in [5] is understood as a combination of human abilities and attitudes that ground the perception of the real world in relation to totalities. This approach not only enables a more comprehensive analysis and deeper understanding of the elements of the system but also stimulates actions based on their overview.
Through application, GST justifies its relevance in this regard. GST provides a framework for understanding how individual elements of a system interact with each other to produce emerging behavior and emphasizes the interdependence and interrelationship between these components.
From the perspective of GST, the concept of closed and open systems was reinterpreted in the context of organizations (groups, companies, etc.) regarding their interaction with the environment [6]. In this sense, organizations that are considered closed systems are viewed as isolated from their environment, with a focus on internal structures and behaviors. On the other hand, organizations considered to be open systems are connected to their environment, with attention paid to how this interaction is managed.
Recent studies on GST, based on seven central principles, include the interdependence of components, the importance of adaptive systems, and the need to understand the system [7]. This perspective has been validated in various contexts ranging from ecology to economics [5][8][9][10]. In the case of the humanitarian supply chain, the use of GST by [11] provides a deeper and more nuanced understanding of how power drives decision-making in complex and challenging organizational contexts, such as humanitarian. In the context of organizations, systems thinking becomes indispensable. Its application stimulates the flexible creation of knowledge and enables companies to adapt to changes and challenges in the environment and to develop innovations. This approach can be used to catalyze the transformation of businesses into intelligent organizations capable of learning and proactively adapting to the changing environment.
GST therefore offers a theoretical and methodological framework for the development of robust systems thinking in a business environment. This framework promotes the understanding of organizations as dynamic and interdependent systems that can enhance decision-making, strategic planning, and innovation while fostering the building of more resilient and adaptable intelligent organizations. The true essence of systems thinking lies in recognizing the importance of each element of the system, even those that at first glance seem irrelevant or of secondary importance [12]. Using this rational, logical, and strategic approach, the aim is to identify and address the root causes that produce specific impacts in a system.
This implies considering the underlying structure of a system, which is crucial to its behavior [13]. When strategic decisions do not take such structure into account, one can inadvertently hit the limits of the system, which, in the long run, can turn what appears as initial success into a problem for the organization. In [12], the above is illustrated using an example of when a product’s sales fall short of expectations. The immediate response could be to focus on improving the sales department (motivation) when the problem may be systemic in nature and originate anywhere within the organization (e.g., quality) and externally (suppliers).
This scenario shows both the limits of linear thinking and the importance of adopting a systems view to tackle complex problems. In this context, measurement models conceive the enterprise as a social system that coexists in two domains, that of people and objects and the social domain, allowing for a more coherent view of organizations, where all functions and activities revolve around the system, whose goals rotate, rather than their operation as separate entities [14][15]. In this way, GST provides a valuable framework for understanding an organization and the functioning of companies from a systems perspective.
From the above, it can be concluded that GST has contributed significantly to analyzing and understanding organizations from a holistic and systemic perspective in business management [16]. However, in the current environment characterized by sustainability and global constraints, failure to incorporate the SDGs into a systematic analysis of organizations can lead to significant gaps in their ability to understand and address the complexities of sustainable growth [17]. From the perspective of GST, organizations not only interact in isolated ways but also have complex interactions with the external environment [15]. This implies an inherent responsibility of organizations to broader topics, including those highlighted in the SDGs. The SDGs set by the United Nations represent critical areas that have been identified as requiring attention to ensure a sustainable future. Neglecting these goals in organizational and strategic analysis could lead to short-term solutions and unsustainable efforts.
There is a clear opportunity to integrate the SDGs within the framework of GST. These goals address complex problems that require a systems approach to solve. For example, when considering goals such as responsible consumption and responsible production, companies should examine not only their internal operations but also how they interact with the broader business ecosystem [18]. Such a holistic perspective is consistent with the underlying philosophy of GST.
Therefore, although GST provides an essential framework for looking at organizations from a systems perspective [9], there is a perceived need to further develop and expand this framework to include the SDGs. This would not only facilitate a better understanding of global challenges but also actively contribute to developing and implementing sustainable solutions [19].

2. Organizational Performance and SDGs

The SDGs, which replaced the Millennium Development Goals, were adopted by UN member states in 2015 and comprise 17 goals and 169 targets that address a range of social, economic, and environmental challenges, including poverty, hunger, health, education, gender equality, clean water and sanitation, decent work and economic growth, industry, innovation and infrastructure, reducing inequality, sustainable cities, responsible consumption and production, climate change, life below water, life on land, peace and justice, and partnerships for the goals [20].
On the other hand, organizational performance has held a central place in the study of organizational management for decades and is a key pillar in the seminal work of [21]. However, the emergence of the United Nations Sustainable Development Goals (SDGs) in 2015 has sparked growing academic interest in how these goals can influence and improve organizational performance [22].
This renewed focus is driven by the growing recognition that sustainability and business performance are linked in ways that are not yet fully understood [23]. Recent studies support the idea that commitment to the SDGs can have a significant impact on multiple dimensions of business performance, including operational efficiency, business reputation, and financial performance [24][25].
Organizations that manage to align their strategies and operations with the SDGs benefit not only from improved performance but also from greater resilience to market turbulence and better stakeholder relationships [26]. By adopting the SDGs as a comprehensive framework for strategic decision-making, organizations can achieve sustainable competitive advantages while contributing to the achievement of social and environmental goals on a global scale [27].
However, this path to SDG mainstreaming is not without its challenges. Organizations can struggle to balance short-term needs with long-term goals [28]. Despite these challenges, the increasing pressure for greater transparency and corporate accountability from investors, regulators, and society at large suggests that incorporating the SDGs into organizational strategy and operations will increasingly be an expectation, not an option [29]. In this sense, the role of organizations in achieving the SDGs is a topic of growing interest in the scientific literature concerning SDGs 8, 9, and 12.
Goal 8: Decent work and economic growth—This goal emphasizes promoting inclusive and sustainable economic growth, productive full employment, and decent work for all. Despite its importance, its implementation poses significant challenges, particularly in developing countries. Some studies have highlighted that organizations can play a crucial role in achieving this goal, notably through fair, equitable, and inclusive employment practices and the promotion of entrepreneurship and innovation [30]. However, others argue that focusing solely on economic growth could undermine other SDGs, such as those related to the environment [31].
Goal 9: Industry, innovation, and infrastructure—This goal promotes the building of resilient infrastructure, inclusive and sustainable industrialization, and innovation. In achieving this goal, many studies have emphasized the role of organizations, particularly in the technology and innovation sectors. Some studies also suggest that organizations that adopt open innovation practices are better able to contribute to this goal [32]. However, as with SDG 8, there are concerns about possible trade-offs with other SDGs, particularly those related to environment and sustainability [33].
Goal 12: Responsible consumption and production—This goal focuses on ensuring sustainable patterns of consumption and production. Some studies argue that organizations play a pivotal role in promoting more sustainable consumption and production patterns by adopting practices such as developing sustainable products, adopting circular economy principles, minimizing waste, and promoting responsible consumption [34]. However, others point out that the responsibility for this goal should not lie solely with organizations but requires the participation of all actors in society, including consumers and policymakers [35].
Overall, the literature on the SDGs shows there are different perspectives, but there is a consensus on the important role that organizations play in achieving them. However, there is also recognition of the significant challenges and trade-offs to be considered, and that a more integrated and systemic approach is required to implement them.
The relationship between various organizational factors such as management [36], technology [37], innovation [38], and the performance of companies is a much-studied topic in corporate governance and sustainability. The main factors include environment, human resources, management, technology, and innovation.
The environmental field has become increasingly important in recent years and is recognized as a critical factor in business performance. In one study [39], the resilience of automotive and aerospace supply chains was analyzed in the face of the COVID-19 outbreak, and the need to integrate environmental factors into business planning and management was emphasized.
On the other hand, Ref. [40] examined the impact of knowledge management practices on green innovation and sustainable enterprise development. They found that such practices can improve organizations’ ability to develop green innovations, thereby contributing to corporate sustainability.
In the area of human resources and management, Ref. [41] examined the relationship between environmental ethics, environmental performance, and competitive advantage and found that environmental training plays a crucial role.
Regarding technology and innovation factors [42], how technological innovations are managed together with globalization has become a driving factor for service quality and organizational competitiveness. Finally, in the study by [43], it is pointed out that social networks can play a crucial role in knowledge formation that indirectly affects organizational performance.
Taken together, these studies demonstrate the importance of environmental, human, managerial, technology, and innovation factors in business performance and underscore the need for further research on how these factors interact and can be effectively managed to promote business performance and sustainability.

3. Structural Archetypes and Innovative Capacity in the Current Context

Traditional organizational design theory focuses on the existence of universal forms and the assumption of a single optimal form of organization, as shown by the work of [44] on bureaucracy and [45] on multidepartmental structure. However, in the 1960s and 1970s, this premise was challenged by contingency theory, and it is currently postulated that variations in organizational forms are adaptive responses to context demands [46].
In the current post-pandemic context, these approaches are becoming increasingly relevant as environmental change is more dynamic and complex than ever. Organizations are forced to adapt quickly to situations of uncertainty and volatility, for which innovation is required both in their internal processes and in the products or services they offer [47][48].
Borrowing from the archetypes of mechanistic and organic organizations proposed by [49], it can be concluded that organizations may need a more organic approach in the post-pandemic environment, thus being able to adapt quickly to new conditions created by accelerated change and innovation, which are constant [50]. Even mechanistic and organic structures can coexist in different parts of the same organization in response to the different demands of functional sub-environments [51]. In this sense, the notion of ambidextrous organizations, in which mechanistic and organic features are combined to adapt to both evolutionary and revolutionary changes [52][53][54], can be particularly useful. In an environment where innovation and adaptability are essential for survival and success, companies must be able to manage these two aspects effectively [55].
In addition, the demands on companies have changed due to the growing concern for sustainable development. Therefore, there is a need to balance profitability and competitiveness with a commitment to ethical, social, and environmental issues. In this sense, changes in industrial systems, resorting to practices based on circular economy, product–service systems, and the Sustainable Development Goals, are strategies that can be used to meet these market needs [56].

4. Organizational Performance Measurement and Monitoring Model

The systemic approach is used to investigate these relationships; consequently, it follows from GST that an organization is a complex of parts that interact with each other to form an organized whole. In this sense, Ref. [57] argues that organizational integration is viewed as a potential connection between people and organizations to achieve specific goals and create competitive advantage. Within this framework, a diagnostic tool is proposed to assess the current state of a company, which is the initial phase of the model [58].
Strategic measures are then implemented that aim to eliminate identified weaknesses and fortify the company’s strengths. After the implementation of these strategies, a new diagnosis is made to identify and quantify the evolution of key performance indicators. Using this feedback process, it is possible to monitor and measure the progress of SMEs and adjust strategies where necessary [59].
A model with an integral approach must include spatial configuration variables, temporal dynamization, and relational visualization [60] to meet the conditions for the viability of a business organization: internal coherence and congruence with the environment [61]. Achieving this requires overcoming the limitations of other models in terms of their practical application, limited focus on resources, difficulty in measuring their impact, and minimal focus on innovation. This creates value by enabling the understanding of the structure and functioning of companies toward facilitating the development of effective strategies to improve business performance.

This entry is adapted from the peer-reviewed paper 10.3390/su152115186

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