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The study of the relationship between consultation and decision processes in an industrial research laboratory showed the efficacy of multidirectional consultation coupled with a pattern of shared, decentralized decision making. The loose, decentralized pattern was closely associated with more science-oriented activity, while the hierarchical pattern with more practical or organizationally relevant activities. The relationships obtained between this loose or hierarchical pattern and performance were mediated by coordination, adequacy of work expectations, and level of member involvement. The results also suggested that when decision centers are consistent with consultation centers, implying a congruence between authority and expertise, the overall structure of the laboratory is less important. [ABSTRACT FROM AUTHOR]

This paper examines two different ways of measuring the distribution of power in sixteen health and welfare organizations. Participation in decision making about the allocation of organizational resources and the determination of organizational policy was strongly related to the degree of complexity as measured by (1) the number of occupational specialities, (2) the amount of professional training, and (3) the amount of professional activity and was weakly related to the degree of formalization as measured by the degree of job codification and the amount of rule observation. Except for rule observation, hierarchy of authority or the reliance on the chain of command for work decisions was not as strongly related to each of these measures of organizational structure. A partial correlational analysis between each measure of the distribution of power and the five structural properties indicates that participation in decision making retains an association with the first two indicators of complexity and the first indicator of formalization even when the other five variables are controlled simultaneously. The hierarchy of authority retains an association with the amount of professional activity and the amount of rule observation. At the same time, it is important to recognize that these two measures of the distribution of power are themselves strongly interrelated. When decisions about the allocation of organizational resources are centralized, then there is a centralization of work decisions as well. [ABSTRACT FROM AUTHOR]

This article presents views on a paper presented by David F. Bradford and Wallace E. Oates during a panel discussion focused on the theorem that matching grants are more stimulative than lump-sum grants of equivalent amount. Charles J. Goetz suggested that from a methodological standpoint, the Bradford-Oates study did not imply excessive generality wherein it contradict the earlier Goetz-McKnew economic model. Thomas E. Borcherding examined the issues of fiscal decentralism wherein he criticized it on the following grounds: (1) the incorrect characterization of fiscal centralism; and (2) the total neglect of the mechanism linking the decisions of noncentral units with the central unit's decision as to the method of finance and dispersal of the grants-in-aid. Walter E. Williams examines the mathematical models of fiscal decentralization.

This paper compares the predictive power of the concept of élite values with leader values, member values, and the three structural variables of complexity, centralization, and formalization. Elite values proved to be slightly better predictors than either leader values or complexity. When élite values and complexity were combined, there was a considerable increase in the amount of variance explained indicating that these variables are independent. Three contrasting definitions of the élite were considered but one proved a better predictor than the other two. [ABSTRACT FROM AUTHOR]

An integration of the rational model of expectancy theory and the "caring for people" philosophy of the participative approach to employee motivation is presented. The paper describes four ways in which these theories argue that the same processes increase motivation. Data are presented that support these predictions. [ABSTRACT FROM AUTHOR]

This paper replies to Hummon's criticism of the Carzo-Yanouzas experiment. Justification is presented for the use of a split-plot repeated measures design, and tests for homogeneity support the use of this design. Variables which Hummon considered to be not under control are explained as attributes of structure or as variables having inconsequential effects. [ABSTRACT FROM AUTHOR]

Organizations that have a single or a few related product lines and a high degree of vertical integration tend to be capital intensive, and to be organized in a centralized, functionally-departmentalized structure. Organizations that have a diversified product line tend to have a decentralized, divisional structure. This paper indicates that the first type tends to concentrate on domestic markets, while the second type accounts for most of U. S. direct investment abroad. Expansion abroad requires diversification, reorganization, and the training of general international managers. The evidence suggests that the organizations that have been most successful in meeting this new challenge have been those that had previously acquired the ability to develop general managers capable of controlling and guiding a heterogeneous, diverse enterprise. [ABSTRACT FROM AUTHOR]

The power of attendants at state mental hospitals to influence policy has often been noted. This paper suggests that the distribution of power in the state mental hospital fails to conform to Michels's "iron law of oligarchy." From an analysis of the ward system, three main characteristics are derived. These are then stated as the formal characteristics of a front-line type of organization in which power tends to be distributed to peripheral units rather than to centralized positions of leadership. It is suggested finally that a front-line type of organization presents special problems of control and hence will tend to develop characteristic structures and processes of control as solutions. [ABSTRACT FROM AUTHOR]

Assume that you have been asked by the president of a large firm to advise him on the most desirable levels of decentralization in order to control the activities of different departments within his organization. Upon what factors would you be likely to base your decision! A recent investigation indicates that to establish appropriate levels of decentralization, one's decisions should be, at least partially, based on: the types of productive tasks workers perform in general; and, the degree of predictability of work demands, in particular. This paper provides a partial explanation of several non-administrative cause for differences in the degrees of discretion workers exert in performing their tasks. Specifically we attempt to trace the influence of two factors upon discretion. One is the predictability of work demands; the other is the professionalization of jobs. Before attempting to analyze these relationships, let us take a brief view of the research design and the components of discretion. [ABSTRACT FROM AUTHOR]

This article presents information on decentralization on the basis of price schedules in linear decomposable resource allocation problems. The author presents a simulation of a problem faced by a hypothetical multi-divisional manufacturing organization. The author mathematically examines how the organization determines which divisions will produce and sell which products based on corporate and divisional constraints. The author notes that the organization's overall goal is to design a production program that allocates their resources in a manner that maximizes the total contribution of all divisions.

A group of Faculty members of the School of Industrial Management at Purdue University have for some time been engaged in studies of decision making in a large, decentralized American manufacturing company. These studies have investigated decisions at the mills producing raw material and the converting plants of this fully integrated company. Examinations have been made of decision processes within and between company plants with the objective of adding to theory of behavior in organizations, particularly theory of working relations and theory of cognitive processes in the carrying out of complex organizational tasks, and application of theory to the solution of practical problems, such as those of scheduling production and of formal organization.
This paper discusses one of these projects, an attempt to construct a behavioral model of the decision rules actually employed to schedule orders for production in one of the firm's plants. This project has sought to embody decision rules in a computer program which will, in fact, take incoming data on orders and plant capacity and convert this into an operating schedule in a manner highly analogous to that of the human schedulers who performed this task.[] The following discussion avoids technical details, since the aim of this paper is to give an overall picture of the major purpose and problems of this type of research; to describe its origin and to suggest possible future application as seen by the researchers. [ABSTRACT FROM AUTHOR]

The article presents a short-run planning model for a decentralized firm, which includes a linear programming model for the allocation of scarce corporate resources. The decentralization philosophy is well known and its essence lies in the desire by large firms to delegate responsibility decision making on a broad basis throughout the organization. A classical decentralization problem occurs in the planning phase of a decentralized organization. It consists of the question of how to obtain an optimal plan for the firm as a whole while allowing each division to do its own planning. An important limitation to the decomposition technique is that only problems of a certain form can be subjected to the technique. The decentralization model presented has the general form required for the application of the decomposition technique. The "market" values are, in mathematical programming terminology, the dual values on scarce corporate resources. This description essentially applies to all applications of the decomposition methodology to the decentralized decision making problem.

This paper has attempted to show that no one method of transfer pricing can fill the needs of a decentralized corporation. The uses of the information have been isolated and the methods best accomplishing the objectives of significant reporting have been identified as shown below. No pretense of absolute correctness has been made for any of the pricing methods. The admitted inaccuracies must be weighed against the unmeasurable gains resulting from having decentralized operations and decision-making. One final conclusion should be noted; the greater the significance of the intradivisional transfers the more unreliable are the measures of income of the divisions. [ABSTRACT FROM AUTHOR]

A number of abstracts are presented for articles pertaining to the field of marketing management. They include "The Importance of Electronic Data Processing to the Sales Function," "A Marketing and Financial Evaluation of the Manifold Business Forms Industry," and "Information Flow and Decentralized Decision Making in Marketing."

In the second of two articles based on a government organization for medical research, the author presents data from 338 scientists showing how their attitudes on the adequacy of various auxiliary services are related to the central or divisional source of services, to use of direct or indirect channels, and to use of personal or written contact. The role of the divisional administrative office is examined. Implications for practical problems, such as centralization of services, and for the concept of control in organizations are discussed. [ABSTRACT FROM AUTHOR]

The article discusses aspects of the Spokane, Washington wholesale market. A study of the market was conducted from 1949-1951. The objectives of the study were to determine the extent of the trading area for major wholesale lines, to identify trends in the market, and to obtain competitor information. Researchers found that the wholesale market was dominated by the regular, or merchant, wholesaler. Competition between the Spokane wholesale market and other large U.S. city wholesalers was significantly influenced by transportation costs and distance. The study revealed that there exists some tendency for the market area to move eastward and that some decentralization had taken place.

This paper considers controllability questions of this type, using slightly different definitions of controllability from those used by Arrow and Kurz. Arrow-Kurz (p. 120) define controllability of a policy rather than of a system. Their definition therefore implicitly assumes a certain objective function (which gives rise to the policy in question).In this paper, the concept of controllability is defined for a dynamic system without reference to policies or objective functions. We apply largely known results to study the controllability of decentralized economic systems, extending them slightly when necessary. it does not seem, however, that controllability requirements for decentralized economic systems have been studied in the way presented in this paper. In particular it is shown that local controllability about a point in a growth path is implied by the controllability properties of certain associated linear or bilinear systems. Thus, these associated systems serve as approximations to the original system. We give various definitions of controllability in the next section. A discrete-time model is formulated in Section 3. Its controllability properties are the subject of Section 4. After deriving the equation for the perturbation of a growth trajectory due to small changes in the instrument values, local controllability by the policy maker with a single tax (consumption tax only, saving tax only and one common tax for consumption and saving) is examined in detail, with particular attention paid to conditions under which the model may not be locally controllable. One of the interesting results is that the decentralized economic system studied in this paper is not necessarily locally controllable by the government with only one instrument, unless the response of the consumers' savings behaviour to tax changes meets certain conditions. These conditions allow interesting economic interpretations. [ABSTRACT FROM AUTHOR]

While Dantzig and Wolfe have formulated the decomposition algorithm as a computational device, it was subsequently recognized that the principle underlying the algorithm may also be utilized by a planning system to achieve a centralized planning within the framework of a decentralized organizational structure. This paper illustrates the workings of such a planning system and, at the same time, explores some of the problems connected with its actual implementation. The planning system under the study is called the decomposed planning system in order to distinguish it from either the centralized planning or the decentralized planning. [ABSTRACT FROM AUTHOR]

Decomposable mathematical programming problems sometimes admit a certain degree of decentralization in the decision process. By an informative interplay between a central authority and a number of subdivisions one hopes to establish the overall best solution. This interplay can be organized in either of two ways: direct or indirect distribution. However, an absolute prerequisite for such procedures to be successful is the availability of an optimality criterion to the centre so as to know when to stop the iterative process. It is well known that for either of two cases the optimality conditions as derived from the Kuhn-Tucker conditions for the overall problem are not satisfactory. The present paper makes a comparison between the shortcomings of the two kinds of conditions. In the case of direct distribution this condition turns out to be necessary but unfortunately not sufficient and for indirect distribution the condition is sufficient but not necessary. The insufficiency in the direct and the absence of necessity in the indirect case, which are caused by eventual nonconvexities of the problem, are explored a bit further. A simple example is presented. [ABSTRACT FROM AUTHOR]

A number of analytic formulations of resource allocation activities in decentralized organizations have considered the effects of economic or technological externalities but most treatments have neglected concomitant organizational or behavioral effects. This paper introduces the concept of a behavioral externality and relates it to the decision-making process in decentralized organizations. Alternative analytic formulations of behavioral externalities are examined, and a numerical example is presented. [ABSTRACT FROM AUTHOR]

The organization structure of the firm has been the subject of diverse research approaches. The purpose of this paper is to provide a framework for integrating the various views and analyzing the various factors that affect centralization and decentralization. After a historical review of some milestones in organization research, a definition of decentralization which is based on the overall objectives of the firm is provided. The notions of hierarchical and mutual interaction structures are examined and contrasted with the notion of decentralization. Finally, the determinants of divisionalization are analyzed, and the suggestion is made that a study of the covariance matrix of subunit performance will guide us to the areas that need attention for possible reorganization. [ABSTRACT FROM AUTHOR]

Motivating employees to work for the goals of the firm has long been one of management's most important and vexing problems. The search for methods that motivate effectively, that induce the employee to work harder for the firm's goals, led to experimentation with a wide diversity of devices. In recent years, several writers emphasized that the firm's accounting system has a direct influence on the motivation of managers. This paper (a) surveys the available findings of research done in the behavioral sciences and organization theory as they bear on motivation and (b) critically examines the accounting system and reports in the light of such findings. Decentralization contributes to effective motivation. The firm's accounting system facilitates decentralization and hence has an indirect but important impact on motivation. The direct use of accounting reports, such as budgets, for motivation can result in reduced performance, if the budget is imposed on the department manager. The accounting system facilitates decentralization, which is conducive to effective motivation. Furthermore, the careful use of accounting reports can directly contribute toward effective motivation by expressing goals and by supplying knowledge of performance.

The present article is an effort to present the new decentralism as one of the many philosophies of the present age, which are competing for the right to structure the nature of the coming social order. It is not that communal decentralism has been tried and found wanting. Rather it has not been tried at all. What is now needed is a systematic, public program of education in the decentralist philosophy and systematic research to give concrete form and substance to that philosophy by community planning and design if only on paper, which will make use of those forms of science and technology which lend themselves to community planning on a small scale. Such research should also block out the relationships between inescapable types of centralization needed in the modern world and the projected forms of decentralized communities and institutions. Only in this way can decentralists give substance to economist Paul Goodman's notions of decentralization and the mixed system. One cannot predict whether decentralization will get a second chance. What one can be sure of, however, is that with the help of science and technology it can be shown to furnish feasible solutions to some of the problems. Whether mankind will listen or whether the inertia of traditional thought and social habit will forever eclipse the possibilities for decentralization is something that only time will settle.

This paper examines conceptual problems that arise when one has to specify production functions having public goods as an input. First, of particular interest is under what specifications the Samuelson conditions are meaningful or even valid. Secondly, I examine problems that arise when pure public goods enter production functions as unpriced inputs. For example, when unpriced private goods enter production functions of certain specifications they earn a rent that accrues to entrepreneurs as profits. These profits may attract entrants into the industry to dissipate the rents. For private goods this dissipation causes factor usage distortions as analysed extensively in the literature (Worcester, 1969; Meade, 1955). The question is whether rent dissipation with unpriced pure public intermediate inputs causes factor usage distortions. [ABSTRACT FROM AUTHOR]

A mathematical expression for the cost of maintaining a client-centered service organisation is derived. It shows the dependency of the total cost on the service-request load, the number of hierarchical levels of the organization, and the administrative costs. The mathematical formulation is based on a model in which the main variables are the times spent on communication between different levels of the organization and on communication between agents at the same level. The optimum number of levels for minimising cost is derived, and its sentivity to request load is investigated. [ABSTRACT FROM AUTHOR]

Recent patterns of urban growth have reflected the redistribution of manufacturing employment within and among metropolitan areas. As the production requirements for manufacturing have changed, so have the economic strengths of alternative production sites. This paper focuses on the determinants of metropolitan (SMSA) differentials in the extent of manufacturing decentralization, and city differentials in the growth of manufacturing employment. Location decisions within SMSAs depend on the significance of agglomeration economics found in the city relative to potentially lower unit labor and land costs available outside it. The most important of the agglomerative forces are urbanization economics, not readily transferable to suburbs. External economics accrue from central city locations to groups of firms, resulting in lower average costs of production. The most important economies come from the availability of ancillary services, centralized shipping points, and larger, more skilled labor supplies. Firms dominated by urbanization economies are typically small and use space vertically rather than horizontally. Thus, higher unit land costs in cities are less an obstacle to centralized firms than to those for which horizontal plant layouts will minimize costs.

This is the first of a series of simple mathematical models to explore the concept of decentralization. The primary focus is on pluralization as one of three aspects of decentralization. We derive expressions for cost and for net benefit as a function of the number of identical, uniformly dispersed facilities capable of servicing requests from sources that are uniformly distributed along a long, thin, geographical strip. The optimal, or cost-minimizing, number of such pluralized facili6es is computed. We also derive conditions in terms of the basic parameters, such as the number of requests per month, transport costs per unit time, etc., which favor pluralization over centralization. The models are also analyzed for the secondary benefits of redundancy for more dependable service and to smooth fluctuations in demand. We found that, on balance of all the factors, historical trends—particularly the trend toward more requests per unit time—favor pluralization. [ABSTRACT FROM AUTHOR]

This paper presents a decentralized planning routine—i.e. an iterative procedure for solving the problem of finding an optimal short-run plan for a centrally-planned economy. Earlier publications in this area group neatly into two distinct categories: those where the centre quotes prices for goods and services, and those where it proposes quantitative allocations. The routine to be outlined below falls into neither of these categories. It can be given different institutional interpretations, one involving a mixture of price and command planning and bearing an appealing resemblance to the mixture of materials balances and markets actually used in certain planned economies, and the other partially resembling the market socialism of Lange, Arrow and Hurwicz. [ABSTRACT FROM AUTHOR]

The purpose of the paper is to carry out a theoretical appraisal of a labor-managed economy of Yugoslav type. It is this type of economy that represents, by and large, the true aspirations of reformers in eastern Europe. The labor-managed economy will be producing the maximum producible output from given resources and the maximum social satisfaction for a prescribed distribution of income. These conclusions follow from the fact that competitive labor-managed firms equalize factor marginal products to factor returns for all factors including labor, from competition in nonlabor factor markets, free entry of firms and identical technologies. The most significant comparative advantage of the labor-managed oligopoly arises in connection with product differentiation and sales promotion. It can be shown that the labor-managed firm will in equilibrium produce less and engage in a less intensive advertising campaign than an equivalent capitalist firm as long as the latter makes positive profits, a condition which obtains virtually without exception.

There are still many open questions concerning the respective merits and deficiencies of different types of resource-allocation processes. The main purpose of this paper is to show some limitations of those types of centralized processes where a central agency determines either all commodity flows or the prices of all commodities. It does so by considering some problems of languages available for inter unit communication. Instead of the traditional assumption of a sufficiently detailed common language equally well understood by all participants in the process, it chooses a more realistic approach, viewing any common language as inevitably based on some agreement among the participants' individual classifications of economic states and events. This allows us to see other obstacles to centralization besides traditional difficulties with the speed and costs of centralized communication and computation. To avoid any misinterpretation of thearguments presented, two marginal remarks may be in order. First, arguments againstcentralization are by no means a defense of decentralization

The article discusses a variety of topics, including cost accounting, decentralized control in management, incentives in industry and the assignment of joint costs and internal pricing. According to the author, managers should design systems of rewards for those who take risks in their decision making that give proper weight to a decision's worth to the organization. Also discussed is the theory of cooperative games as it relates to joint rewards and incentives obtained by groups of individuals acting together.

In this paper we have reexamined the relationship between the controller and the controlled within the organization. We have argued that this relationship revolves around the budget process and that the "controlled" exercise significant influence on the outcome of their budgets. This influence manifests itself in the amount of slack which managers (and all other participants) can incorporate into their budgets. The theoretical rationale for such dysfunctional behavior has been previously stated by a number of writers. However, except for the exploratory studies by Schiff and Lewin and Lowe and Shaw, there exist no observations or empirical evidence on how and why managers create slack. Decentralized control was expected to increase organization effectiveness due to the increased participation in decision making created on the local level and because the divisional controller was formally responsible to the corporate controller. Assuming, however, as we did, that financial budgets are no more than a mutually agreed upon control device, then the whole notion of control needs to be reexamined, particularly the role of the decentralized controller who appears to act as the divisional slack manager. Finally, if managerial desire for slack and the attendant dysfunctional consequences must be taken as given then the implications for top management actions must be reconsidered. We have suggested a pragmatic approach aimed at increasing the participation of top management in the budget process on a selective basis. Specifically we have discussed the problem of how top management could impose reasonable goals23 through constructive reviewing of the budget at critical points during the budget preparation process. We have also recognized that top management is severely limited in its ability to undertake on such a task. [ABSTRACT FROM AUTHOR]

The results of a comparative study of 19 United States manufacturing organizations using the Aston group's four abbreviated structural scales and seven other measures support the concept of a multidimensional bureaucratic structure space. Factor and cluster analyses yielded three independent dimensions of decentralization, specialization, and formalization. The results are interpreted to suggest not only that a multidimensional model of bureaucracy is superior to the unidimensional Weberian one, but that the dimensionality of the bureaucratic structure space may be a function of the socio-cultural environment of the organization unit being examined. The results imply that bureaucratic structure may conform to the equifinality principle, in that a variety of structural arrangements appear to be equally viable strategies for the various sample organizations. [ABSTRACT FROM AUTHOR]