The effect of virtuality on the functioning of centralized versus decentralized structures--an information processing perspective

Authors:
Kent Wickstrøm Jensen;Dorthe Døjbak Håkonsson;Richard M. Burton;Børge Obel
Affiliations:
Department of Entrepreneurship and Relationship Management, University of Southern Denmark, Kolding, Denmark 6000;Department of Management, Aarhus School of Business, Aarhus University, Aarhus V, Denmark 8210;The Fuqua School of Business, Duke University, Durham, USA 27708-6245;Aarhus School of Business, Aarhus University, Aarhus V, Denmark 8210
Venue:
Computational & Mathematical Organization Theory
Year:
2010

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Abstract

Does virtuality in organizations require centralization or decentralization? We specify the coordination and information processing requirements for virtual organizing in order to examine how these requirements are met by centralized and decentralized structural designs, respectively. We use the agent based SimVision computational discrete event simulation model as our experimental platform to develop concise and comparable measures of the information processing needs of virtual organizing, and how these are met by the information processing capabilities of the centralized and decentralized structures. Contrary to conventional wisdom, that the centralized form is more effective in virtual settings than the decentralized form.