Centralization, organizational strategy, and public service performance

Abstract

We test the separate and joint effects of centralization and organizational strategy on the performance of 53 UK public service organizations. Centralization is measured as both the hierarchy of authority and the degree of participation in decision making, whereas strategy is measured as the extent to which service providers are prospectors, defenders, and reactors. We find that centralization has no independent effect on service performance, even when controlling for prior performance, service expenditure, and external constraints. However, the impact of centralization is contingent on the strategic orientation of organizations. Centralized decision making works best in conjunction with defending, and decentralized decision making works best in organizations that emphasize prospecting.