ORGANIZATIONAL CHARACTERISTICS OF SMALL AND MEDIUM CROATIAN ENTERPRISES: AN EMPIRICAL STUDY Lovorka Galetic University of Zagreb, Faculty of Economics and Business Zagreb, Trg J. F. Kennedy 6, 10 000 Zagreb 0038512335633, lgaletic@efzg.hr , www.efzg.hr/lgaletic Ivana Nacinovic University of Zagreb, Faculty of Economics and Business Zagreb, Trg J. F. Kennedy 6, 10 000 Zagreb 0038512335633, inacinovic@efzg.hr , www.efzg.hr/inacinovic Ana Aleksic University of Zagreb, Faculty of Economics and Business Zagreb, Trg J. F. Kennedy 6, 10 000 Zagreb 0038512335633, aaleksic@efzg.hr , www.efzg.hr/aaleksic Abstract Organization design encompasses entire organizational system and thus affects enterprise competitive edge. This paper explores organizational characteristics of small and medium-sized Croatian enterprises in order to assess organization design contribution to competitiveness. We show that (1) SMEs most often implement growth strategy, (2) most frequently implemented organizational structure among SMEs is functional organizational structure and (3) most often emphasized corporate culture values among SMEs are customer orientation, teamwork and flexibility. However, we did not find statistically significant difference in competitiveness among (1) firms with different levels of strategy-structure alignment or (2) firms regarding the pace of organizational changes. The findings of the paper provide limited support for the argument that organization design contributes to SMEs’ competitiveness. Keywords: organizational culture, organization design, organizational strategy, organizational structure, SMEs. 1 Introduction One of the basic issues and decision that managers of small and medium sized companies are faced with is a decision regarding firm’s organizational design. The outcome of the organizational design process may be expected to be an important determinant of the performance of companies. However, relationship between organizational design and small firm performance is quite relevant and more complex