Centralization Literature Review

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Literature Review The organization structure is an essential component in every organization, which is enforced by chief executives and governs the relationship between the employee and the organization by defining his rights, responsibilities towards the organization, and his role in achieving the organization goals that will benefit both parties and enables the organization to effectively assess the employee performance and facilitate applying the rewarding system. (Huczynski and Buchanan, 2013) define the organization structure as “the formal system of task and reporting relationships that control, coordinate, and motivate employees to work together to achieve organizational goals”. The pyramid or the triangle presentation is commonly used…show more content…
They wrapped up the following; “Centralization is measured as both the hierarchy of authority and the degree of participation in decision making, whereas strategy is measured as the extent to which service providers are prospectors, defenders, and reactors.”. Moreover, the research claims that centralization has no impact on performance, but it has significant impact on the strategic organization orientation; in other words, the type of service or business the organization undertakes can affect how effective centralization is. Furtherly, concluded that centralization is characterized by high degree of hierarchical authority and low levels of decision participation regarding policies and resources, on the contrary, decentralization demonstrates minimal hierarchy authority and maximizing participating in the decision-making. Additionally, they stated that proponents of centralizing the decision-making believe that it leads to shorter communication channels, faster decisions, and unified processes and procedures, on the contrast, opponents suggest that it ruins performance by restraining lower management layer to take independent decisions, inflexible, lack of proper responsiveness to unplanned…show more content…
Additionally, in (Arcuri and Dari‐Mattiacci, 2010) concluded that organization which groups experts a centralized structure just as IT support experts, hypothetically, they can reach a solution faster raising the gain, but taking into account if they took the wrong decision, this maximizes the risk. On the other side of the coin, if these experts are grouped in decentralized structure, they will be scattered and experience communication barriers, making the decision process exhausting; which leads to minimal gain and arguably risk-averse

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