DECENTRALIZATION IN GROWTH AND DECLINE - A CATASTROPHE-THEORY APPROACH

Catastrophe theory provided a framework to consider the centralization or decentralization of organizational decision-making. The specific concern was the relationship of centralization to the growth or decline in organizational size. Three bodies of literature contributed to the development of hypotheses. First, catastrophe theory suggested a general framework for studying organizational processes. Second, previous theoretical and empirical evidence regarding the relationships between centralization and size suggested the applicability of a cusp catastrophe model. Third, further implications for centralization were drawn from the literature dealing with evolutionary and revolutionary changes in organizational structure. Based on these reviews, catastrophe theory hypotheses were developed concerning the relationship of changes in size to evolutionary and revolutionary changes in the centralization or decentralization of organizational decision-making.