Balancing centralization and decentralization

In the Theory of organizational design managers need to seek a balance between Centralization and Decentralization. Both alternatives have certain advantages and disadvantages:

• The advantage of centralization is that it lets top managers coordinate an organizational activities and keep the organization focused on its goals.
• The advantage of decentralization is that it promotes flexibility and responsibilities by allowing lower-level managers to make on the spot decisions. Managers are accountable for their decisions but have the opportunity to assume greater responsibility.

The ideal situation is where middle and lower managers who are at the scene of the action are allowed to make important decisions. Top managers primairy responsibilities becomes long term strategy making and short term flexibility and innovation.