Centralization is when authority is dispersed among a number of people, while decentralization is when authority is concentrated in the hands of a few people

What is the main purpose of decentralization?

To allow for more innovation and creativity.

What is organizational authority?

The power to make decisions and issue instructions.

Study Notes

Organizational authority is the power to make decisions and issue instructions.
In an organization, authority is usually concentrated in the hands of a few people at the top of the hierarchy.
However, decentralization of authority is a tendency to disperse decision making authority in an organized structure.
This tendency is seen in all organizations to some degree.
Centralization is when authority is concentrated in the hands of a few people, and decentralization is when authority is dispersed among a number of people.
Both tendencies have advantages and disadvantages. Centralization allows for better coordination and control, while decentralization can lead to more innovation and creativity.

Test your knowledge of organizational authority, centralization, and decentralization with this quiz. Learn about the advantages and disadvantages of centralization and decentralization in decision making.