DECENTRALIZED DECISION-MAKING, SUPPLY CHAIN SIMPLIFICATION
AND SERVICE INNOVATION: AN INSTITUTIONAL PERSPECTIVE
ABSTRACT
Multinational organizations have generally focused on centralizing decision-making as a
means to increase market efficiency and effectiveness. However, this strategy approach
warrants a close examination. Arguably, decentralized decision-making is an important
avenue towards integrating partners within a supply chain relationship. Process
simplification through decentralized decision-making enforces tight coordination and
collaboration and ultimately identification to the network. This phenomenon suggests that
the network is the more important environment and the vehicle by which the focal
organization achieves its goals of achieving greater probability for efficiency, capability
(service innovation) and market success. This paper argues for and empirically tests the
concept of decentralization through interorganizational relations by examining the
phenomenon through a neoinstitutional lens. Neoinstitutional theory integrated with
resource dependence theory help to support the concept of process simplification to
achieve isormorphism with the network. The People‟s Republic of China provided the
background to explore centralized and decentralized decision-making structures.
Keywords: Centralization, Decentralization, Institution theory, Resource dependence
theory, Service innovation, Supply Chain Management