Formalization and Business Performance: Is Operational Performance a Relevant Link?
There is no consensus in the organizational literature about the relationship between formalization and firm performance. Some studies have suggested that formalization is beneficial for organization performance, but others have generated contradictory results. In this research, we try to analyze the relationships between formalization, operational performance, and business performance. To test these hypotheses, the structural equation technique was used on data from a survey carried out on organic agro-food Spanish industrial firms. The results obtained show that operational performance fully mediates the relationship between formalization and business performance. Our findings contribute to the organizational literature, providing theoretical and empirical explanations of formalization implications.
Keywords - Business Performance, Formalization, Operational Performance, Organic Agro-Food Industry.