Many of the more promising developments in structural contingency theory delve into the concept of fit, using it to illuminate organizational performance and organizational change. The heart of structural contingency theory is the concept of fit of organizational structure to the contingency. Thus, the level of product diversification has to be determined jointly with the level of area diversification, that is, interdependence is established by examining together products and areas. This is because the medium area diversification introduces links across the separate products due to their geographical co-location (e.g., being in France and so having to deal jointly with the government there). Medium product diversification obtains not only for related, but also for unrelated, product diversification. However, where area diversification is medium and product diversification is also medium, then core operations need to be structured divisionally and so the fitting structure is the area-product matrix (e.g., Asea Brown Boveri). Where area diversification is medium and product diversification is low, then core operations need to be structured functionally and so the fitting structure is the area-functional matrix. There interdependencies exist between the areas, requiring coordination through high-level functional or product heads, at the same level as the area managers, thereby creating the matrix.

Thus, area type matrices fit medium area diversification. The increase in environmental diversity, caused by cultural and political heterogeneity, that is, medium area diversification, requires that the organization mirrors and manages this diversity through having a manager for each area. However, the corporation also needs to have a local manager coordinating each geographical area to deal with local issues, e.g., the host government. For example, a multinational corporation has offices and plants scattered around the world, each reporting up to functional or product heads. In contrast, an area type of matrix is appropriate for an organization that requires coordination along the area dimension in addition to coordination by either function or product. The project-functional structure fits medium product diversity and low area diversity so that operations are geographically proximate and there is no area diversity that needs managing. This resource sharing is facilitated by the projects each being at different stages so that the same resources are not required simultaneously. The relatedness of the products (e.g., at Lockheed-Gelac all the products are transport airplanes) allows the same resources to be used by the projects. Additionally, the heads of the functions coordinate the deployment of resources across projects to reduce costs. Each project manager heads a temporary team, which fosters close interaction between different functional specialists, to facilitate product innovation. A related product organization attains both some product innovation and some cost reduction by using a project-functional matrix structure. Despite the inherent complexity and resulting conflict potential of matrices, they fit some contingencies. In a matrix structure, a subordinate reports to more than one boss. Donaldson, in International Encyclopedia of the Social & Behavioral Sciences, 2001 4.2 Matrix Structures

Does spss 25 have matrix operation