Theses, Dissertations, and Capstone Projects

Year of Award

1995

Degree

Master of Business Administration (MBA)

College

College of Business & Professional Studies

Degree Program

Business Administration

Department

Business Administration

Keywords

company, decisions, size, revenues

Abstract

There is an ongoing debate in the Information System (IS) field about the structure or the IS function (or unit) in organizations. One notable and important aspect of the debate is whether the IS unit should be centralized or decentralized. The debate is evidenced in the several articles that have appeared, in both the academic literature and the trade press, about organizations centralizing and/or decentralizing their IS units, and about the pros and cons of each alternative. Although managers of organizations that have centralized their IS units insist that a centralized form is most appropriate for the IS unit, individuals in organizations that have decentralized their IS units argue that decentralization is the most appropriate alternative for the IS unit. Thus, there appears to be a lack of consensus as to the “goodness” of either a centralized or a decentralized IS form. High centralization of the IS unit involves, in part, a concentration in one location, usually high in the organizational hierarchy, of decision-making authority with regard to the various resources (hardware, software, data, personal, and procedures) and activities (development, operation, and management) that comprise the IS unit. A central group of managers, then, controls the IS activities and resources. High decentralization of the IS unit involves dispersion of decision-making with regard to the activities and l resources to individuals lower in the organizational hierarchy. The management of activities and resources is, then, the prerogative of each individual computer user. No matter what form an organization chooses to adapt for its IS unit, the decision by managers about the form cannot be made in a vacuum. Also, one would hope that the form is not a default but a result of an overt decision. Further, management has to be cognizant of the various factors that can impact both the decision about the form and the form itself. These factors should be recognized and taken into account when determining form. However, the IS literature does not provide many guidelines or models that managers may use to shape their IS units. The results of the studying indicated relationships between several factors that influence IS decentralization. These were: (a) organization size and complex, (b) technology, (c) the company’s external environment, (d) business strategy, (e) the company’s organization strategy, (f) power and authority, (g) annual revenues, (h) number of locations, (i) number of IS personnel. The aggressive of company strategy towards products and markets was negatively associated with IS decentralization. Company decision-making centralization was also negatively associated with IS decentralization. The unpredictability of the technological environment was negative associated with 2 decentralization of IS resources, decision-making about IS resources, and IS activities. The unpredictability about competitors, financial / capital market, and political factors in the company’s external environment was positively associated with IS decentralization. The number of locations of the company was positively associated with decentralization of IS activities. Company size, as measured by annual revenues, was positively associated with decentralization of IS resources and decision-making about IS activities. IS managers, therefore, need to consider these factors when make decisions about IS decentralization

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