Question

How does delegation impact decentralization or centralization of a firm?

Answer 1

Decentralization is defined as the transfer of authority and obligations from top level management to middle or low level management. It is the perfect opposite of centralization, in which the decision-making powers are delegated to managers at departmental, divisional, unit or center level, organizational-wide. It can also be said that decentralization is an addition to delegation of authority.

At present, due to the increase in competition, managers take the decision regarding for the delegation of authority to the subordinates. There is also a chance for efficient level managers to perform better, as well as job independence. In addition, they share the responsibility of the high-level managers leading to quick decision-making and time-saving. This is a very successful method, like for mergers and acquisitions, for the growth of the company organisation.

Centralization is the concentration of authority at central points, systematically and consistently. Despite this, the formal transfer of power in an enterprise is decentralization.
For a small organization, centralisation is best, but the large company will practice decentralization.
The structured organization, there is formal contact. Conversely, communication stretches in all directions within decentralization.