Adaptive change in corporate control practices

Multidivisional organizations are not concerned with what structure to adopt but with how they should exercise control within the divisional form to achieve economic efficiencies. Using an information-processing framework, I examined control arrangements between the headquarters and operating divisions of such organizations and how managers adapted control practices to accommodate increasing environmental uncertainty. Also considered were the moderating effects of contextual attributes on such adaptive behavior. Analyses of panel data from 97 multihospital systems suggested that organizations generally practice selective decentralization under conditions of increasing uncertainty but that organizational age, dispersion, and initial control arrangements significantly moderate the direction and magnitude of such changes.