Final answer:
The team-based structure provides a firm with the most flexibility to respond to changes in the marketplace and engage in innovation. However, it may have drawbacks, such as slower decision-making and the need for effective leadership and communication.
Step-by-step explanation:
The type of organization structure that provides a firm with the most flexibility to respond to changes in the marketplace and engage in innovation is team-based structure.
This type of structure involves bringing together diverse skills, experience, and expertise into teams and giving them specific tasks or goals to accomplish. The team-based approach allows for collaboration and adaptability, making it easier for the firm to respond to changes in the marketplace and drive innovation.
However, there are a few drawbacks to this structure. Team-based structures can sometimes be slower in decision-making compared to hierarchical structures. It also requires effective leadership and clear communication to ensure that teams are working in sync and that innovation efforts are aligned with the overall goals of the organization.