Research on the Variability and Impact of Industrial Organizational Structure under the Background of Internet Plus Era〔*〕

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Research on the Variability and Impact of Industrial Organizational Structure under the Background of Internet Plus Era〔*〕

He Bing

(School of Economics and BusinessZhongshan School of University of Electronic Science and Technology, ZhongshanGuangdong528400)

Ⅰ.Theoretical analysis of optimal industrial organizational structure in the context of Internet plus

1.Analysis of optimal industrial organizational structure

This paragraph will analyze the optimal industrial organizational structure and determine the best matching form of industrial organizational structure mainly based on the existing industrial level and capacity. It is significant to emphasize the division of industrial organizational units and contact information when it comes to the industrial organizational structure. The traditional industrial organizational structure was divided in a hierarchical manner with the decision-making layer at the top, the executive layer at the bottom and the implementation and coordination layer in the middle. From the external form, this structure is similar to pyramid. The decision-making layer is at the top of the organization with the minimum number of people. The executive layer is at the bottom with the largest number of employees. The implementation and coordination layer is in the middle with a few people. For the triangular shape, the number of middle layer of the hierarchy is uncertain, but must be greater than 1 in general. This paper will take the single form of industrial organization an example to discuss how to achieve the optimal allocation of resources with a premise that industrial scale, industrial properties, industrial production and industrial environment have not changed.

Top layer’s efficiency depends on the communication with and feedback from the middle layer while bottom layer’s efficiency is determined by the understanding and implementation of middle layer’s intention. For multiple layers structure, the efficiency of communication still exists. One thing to be noted is that work efficiency shall be weakened in each layer to a different degree. When the communication efficiency is 1, the effect is not weakened. When it is 0, the working effect is completely offset. When it is other values, the corresponding work effect shall be at the corresponding degree. In other words, the higher communication efficiency is, the real input will be bigger with the same input while the lower communication efficiency is, the real input will be smaller with the same input.

In the actual process of industrial output, with the same organizational structure and equal communication efficiency, the actual output may be different. Obviously, the main reason is the level of industrial organizational management and decision-making ability. When other assumptions are unchanged, the higher level of industrial organizational management and decision-making ability is, the output is bigger; on the other hand, it is lower. For this kind of decision-making process, contribution rate shall be used as a factor of input in the actual analysis. The higher level of industrial organizational management and decision-making ability is, the larger the contribution rate will be; on the other hand, it is smaller. The above analysis indicates that the output will be equal only when there is the same level of inputs, communication efficiency and contribution rate. Otherwise, it will not be equal.

Now there is a new problem for factor allocation about how to achieve maximum output under given production conditions and organizational structure. According to the three levels of communication efficiency and the contribution rate, three necessary conditions for the maximum output is determined on the basis of optimization analysis and macroeconomic analysis. The first condition is that the contribution rate of each input factor must be greater than 0. The second condition is that the contribution rate of each input factor must not be 0. The third condition is that the contribution rate of each input factor shall equal to the actual input ratio of that factor. One thing to be noted is that the actual input of that factor refers to the corresponding element input according to the determined communication efficiency instead of the original input. The maximum output will occur when these three conditions are satisfied, which indicates industry structure matches with the actual level of industrial organizational and organizational capacity. For multiple industrial organizational structure form, analysis can be conducted with the same method to achieve maximum output. Also it requires to meet the above three conditions.

2.Analysis of optimal industrial organizational structure under the background of Internet plus

The above analysis has made it clear that the maximum output can be obtained with equal input for single form of industrial organization. But how to select element input to ensure the maximization of the overall output for multiple forms of industrial organization?

For this problem, inframarginal analysis can be used. This paper will take the maximum output in every form of industrial organizational structure as object of comparison to determine the variation and the characteristics of the maximum value in different industrial organizational forms. It also compares three layers with two layers of industrial structure according to inframarginal analysis, macroeconomic analysis and optimization analysis. One thing to be noted is that the middle layer is removed in two layers of industrial structure with only the top and the bottom layer. They both have to meet three necessary conditions in order to achieve the maximum output. If the maximum output must be equal, then there are four conditions to be satisfied. The first condition is that the same level of communication efficiency must be increasing. The same level here refers to the top layer in three layers and two layers of industrial structure, and also the bottom layer. The second basic condition is the same level of contribution rate must be improved. The third basic condition is that the same level of communication efficiency must be increasing significantly less than the contribution rate. The fourth basic condition is that the contribution rate of the reserved layer must be increasing equally with the removed layer. The reserved layer mentioned refers to layers in both kinds of industrial organizational structure while the removed layer means layer only in one structure. The relativeness mentioned means the contribution rate to the communication efficiency.

With the development of the Internet, informationization promotes the development of industrialization. Also industrial intelligence and feedback becomes stronger, which shortens the time between making a decision and implementing a policy. At the same time, along with the development of the Internet network, the bottleneck of SOHO office has been supported by broadband devices and networking technology. Moreover, dispersion of industrial organization becomes more intensified. Under the background of remote Internet Office, communication efficiency is no longer be restricted by geographical distance. As long as it is within the scope of Internet, communication efficiency is no longer a problem. This shows that the improvement of communication efficiency has been satisfied in the four basic conditions. When it comes to the contribution rate, the development cycle and the production cycle are shortened with the help of Internet technology and intelligence. The applicability of the products and the demand of the market can be determined by the market in the early stage of product development. Therefore, effective output increases on a large scale with less invalid output. This will not only increase the contribution rate, but also the increasing rate of it will be largely higher than the communication efficiency. That’s to say, it meets the second and the third condition. For the last condition, the equivalence condition will form automatically through the automatic control of market economy. Since we have talked about the three necessary conditions for maximum output in single layer of industrial organizational structure in the stage of element input, this following part will no longer discuss it any more.

Through the above two aspects of theory analysis, necessary conditions and basic conditions of industrial organizational structure changes have been determined. At the same time, it also clarifies the conditions of industrial organizational structure changes in the background of the Internet era (theoretical analysis focuses on how three levels of industrial structure were changed into two levels of industrial structure). In the following, this paper will analyze the industrial structure changes in real environment in empirical analysis.

Ⅱ.Research on the change and impact of industrial organizational structure

The above theoretical analysis determines necessary conditions and basic conditions of the change of industrial organizational structure. The following part will discuss the change and impact of industrial organizational structure through empirical analysis under the background of Internet plus.

1.Object determination and analysis of indicators established

This part will analyze hierarchical structure of industrial organization. In order to make it easy, it will choose three layer structure of the industry organization as an object, and focus on whether it will change under the background of Internet plus and the impact of the changes. This analysis will be conducted from the number of people, contribution rate and communication efficiency of each layer, including the following indicators (seen in Table 1, omitted).

In each implementation layer, there are indicators like average effective work time, and daily average actual working time. These two indicators will be used in a comparative analysis to determine communication efficiency. That’s to say, the proportion of effective work time to the actual working time shall be considered communication efficiency. Accordingly, contribution rate can be calculated through the nonlinear relationship between the number of people in different levels and total output.

2.Analysis of traditional industrial organizational structure, efficiency and contribution rate

This paper chooses five entities in the same industry (home appliance retailer) to conduct the research. The five companies used to adopt the traditional industrial organizational structure to make products. With the expansion of industry scale, they start to make use of Internet plus from different perspectives and make changes of their industrial organizational structure. Based on relevant data of five entities, this paper concludes the corresponding communication efficiency through econometric analysis, and also determines the contribution rate of each layer. In order to facilitate the subsequent comparative analysis, the data are summarized in tabular form (seen in Table 2,omitted).

3.Analysis of industrial organizational structure, efficiency and contribution rate in the context of Internet plus：

Based on the data of the five companies after industrial structure upgradation, the author calculates not only the corresponding communication efficiency, but also determines the contribution rate of each layer. (Seen in Table 3, omitted)

Comparing data in Table 2 and with data in Table 3, you will find two phenomena. The first one is that communication efficiency of the same layer increases greatly after upgradation for all entities. The other one is that contribution rate of the same layer increases greatly after upgradation for all entities. In addition, only entity 3, 4 and 5 meet the aforementioned three necessary conditions and four basic conditions after upgradation.

4.Comparative analysis and research

The reason for this difference is mainly that five entities use five different ways to upgrade the industrial structure. In general, there are two industrial structure upgrade modes in the context of the Internet. They are endogenous upgrade and exogenous upgrade. The endogenous upgrade is the product of industrial development when it comes to a certain stage while exogenous upgrade is affected by the external environment. In the process of endogenous upgrading, any upgradation shall meet at least three of the necessary conditions and four basic conditions for further development. Due to the lack of planning and clear purpose in exogenous upgrading, it will leads to lack of wholeness and logic for industrial organizational structure upgradation, and bring fragments or part of upgrading.

At the same time, monthly output of five companies is increasing after upgradation. However, the output growth of first two entities is very unstable with a decreasing rate of growth while the other three are growing at a relatively stable rate. It can be concluded from the above that the other three companies have undergone an overall promotion and development, while the first two companies are not so successful with unstable goal and unclear results.

Ⅲ.Conclusion

Is industrial organizational structure immutable? Which principles shall be adhered to in terms of the change of industrial organizational structure under the background of Internet Plus era? In order to solve these problems, this paper discusses existing literature of industrial structure and clarifies that the existing industrial structure is neither closely related with internet plus nor empirical analysis. It is impossible to address this problem only on the basis of previous research. Therefore, the author puts forward a hierarchical structure of industrial organization with effective structure upgradation on the basis of macroeconomics, econometrics and industrial organization theory. He also explores three necessary conditions and four basic conditions that shall be satisfied in terms of upgradation. Moreover, he selects five enterprises as samples to determine the communication efficiency and contribution rate before and after upgradation respectively, and verifies the three necessary conditions and four basic conditions that shall be met in order to obtain upgradation. This will provide a feasible path for other industrial organizational structure in China to improve economy, performance and output.

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This paper determines the basic principles and compares the effects of industrial structure changes through hierarchical analysis of industrial organizational structure on five empirical objects according to a combination of theoretical and empirical analysis and also a combination of macroeconomics and econometrics. This will provide three necessary conditions and four basic conditions for the change of industrial structure to improve the entity economy based on industrial upgradation.

internet plus;industrial organizational structure;contribution rate;communication efficiency;changes

About the author：He Bing,lecturer at School of Economics and Business,Zhongshan School of University of Electronic Science and Technology.

〔*〕National Natural Science Foundation of Youth Science Fund Project (No. 11101161), Homotopy Decomposition and Homotopy Index in Nonstable Homotopy Theory;Economy and management experiment teaching center S2012SYZX (Project of Higher Education Department of Guangdong province);research on the coordination of dual channel supply chain under the environment of electronic commerce and customer choice 413N11 (Natural Science Foundation of Guangdong province).