Read the following article to answer the discussion questions (link below). Foss

Question

Read the following article to answer the discussion questions (link below).

Foss, N. J., Lyngsie, J., & Zahra, S. A. (2015). Organizational design correlates of entrepreneurship: The roles of decentralization and formalization for opportunity discovery and realization. Strategic Organization, 13(1), 32-60.

“Organizational design correlates of entrepreneurship: The roles of decentralization and formalization for opportunity discovery and realization”

In our opinion, which is more important for opportunity discovery and realization…formalization or decentralization? Defend your answer.
Based on your reading of the article, if you wanted to encourage entrepreneurship in your organization, what type of organizational design would you implement? How would you go about implementing your design?

Explanation / Answer

Decentralization is more important for opportunity discovery and realization. Decentralization combined with high coordination and knowledge sourcing help in opportunity exploitation. Decentralization gives managers the discretion and autonomy needed to recognize and realize opportunities, while formalization enables the standardization and codification of actions and processes. Opportunity identification involves not only technical skills like financial analysis and market research, but also less tangible forms of creativity, team building, problem solving, and leadership. In this way decentralization is more important than formalization and both decentralization and formalization have direct, positive, and significant associations with opportunity realization.

I would go for decentralized form of organizational design in order to encourage entrepreneurship as I do not believe in controlling employee behavior using written rules, so that employees have little autonomy to decide on a case-by-case basis. A formalized structure is associated with reduced motivation and job satisfaction as well as a slower pace of decision making. Decentralized companies give more authority to lower-level employees, resulting in a sense of empowerment. Decisions can be made more quickly, and employees often believe that decentralized companies provide greater levels of procedural fairness to employees. Job candidates are more likely to be attracted to decentralized organizations. Because centralized organizations assign decision making responsibility to higher-level managers, they place greater demands on the judgment capabilities of CEOs and other high-level managers.

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.