The relationship between centralization and decision-making in multinational corporations (MNC) has been an important structural component (Egelhoff, 1988) of organizational design. The degree of centralization or decentralization has typically been examined in relation to the environmental conditions facing the MNC. Under the information-processing model of MNC’s, Egelhoff (1988) has shown that organizations centralize- decentralize in response to environmental conditions such as strategic complexity, size, and the level of information- processing required for environmental control. Centralization is thus one of the several mechanisms available to the organization to increase its information-processing capacity. Therefore, MNC’s are considered to decentralize in response to environmental complexity and the competitive intensity they face in global markets. In this study we show that the relationship between environmental complexity and centralization is moderated by the degree of use of IT. MNCs with a high level of IT implementation show a lower level of centralization than do firms with low levels of IT use, in response to environmental competitive intensity.
Sethi, Vikram; Mienert, David; Govindarajulu, Chittibabu; and Sethi, Vijay, "The Moderating Role of Information Technology on the Relationship Between Competitive Intensity and Centralization of Multinational Firms" (1998). AMCIS 1998 Proceedings. 153.