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Adaptive change in corporate control practices.

J A Alexander1

  • 1Department of Health Services Management and Policy, School of Public Health, University of Michigan.

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Summary
This summary is machine-generated.

Multidivisional organizations adapt control strategies, often decentralizing, to manage environmental uncertainty. Organizational factors like age and dispersion influence these control changes for economic efficiency.

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Area of Science:

  • Organizational Studies
  • Management Science
  • Information Processing Theory

Background:

  • Multidivisional organizations focus on control mechanisms within their structure for efficiency.
  • Environmental uncertainty necessitates adaptive control practices.
  • Understanding headquarters-division control is crucial for organizational performance.

Purpose of the Study:

  • To examine control arrangements between headquarters and divisions in multidivisional organizations.
  • To investigate how managers adapt control practices amid increasing environmental uncertainty.
  • To assess the moderating effects of contextual attributes on adaptive control behavior.

Main Methods:

  • Utilized an information-processing framework.
  • Analyzed panel data from 97 multihospital systems.
  • Examined control arrangements and adaptive behaviors.

Main Results:

  • Organizations tend towards selective decentralization when facing increased uncertainty.
  • Organizational age, dispersion, and initial control systems significantly moderate these changes.
  • Adaptive control practices vary in direction and magnitude based on organizational context.

Conclusions:

  • Selective decentralization is a common adaptive strategy for multidivisional organizations under uncertainty.
  • Contextual factors play a critical role in shaping how organizations adjust their control mechanisms.
  • Effective adaptation of control practices is key to achieving economic efficiencies in dynamic environments.