How Organizational Structure Affects the Financial Performance of Commercial State Corporations in Somalia

Abstract

This research’s primary objective was to evaluate how the structural organization affected Somalia's commercial state firms' financial performance. It specifically concentrated on how organizational size affected commercial state corporations' financial performance; how formalization of the structure affected financial performance; how much structure complexity influenced commercial state corporations' financial performance; and how much structure centralization affected commercial state corporations' financial performance in Somalia. Using a survey research methodology, the study concentrated on the three commercial state businesses in Somalia. Targeting three commercial state corporations in Somalia, the study used a method based on survey research. Data were collected using both structured and unstructured questionnaires, with closed-ended and open-ended questions; both qualitative and quantitative data were assessed by a statistical software package designed for social sciences (SPSS). It has been shown that characteristics like organization size, formalization, centralization, and complexity affect the commercial state enterprises' ability to succeed financially. The board had trouble establishing a relationship between the number of directors who were not executives and the outcomes of the commercial state company. Finally, the financial achievement of the commercial state companies was found to be affected by the structure of their organizations. The paper provides the recommendations that follow: Since the size and makeup of a commercial state corporation's board of directors have an impact on its financial success, it is important to actively influence the strategies of these organizations. To avoid a limited number of people controlling the company's financial outcomes, non-executive members should also be trained in corporate governance procedures.