Computer-based technology is often credited with making decentralized decision-making possible, helping firms to respond rapidly to changing market conditions. Research on this subject, however, shows contradictory effects: some studies support decentralization and others support centralization. This longitudinal study examines how one form of computer-based technology, programmable automation (PA), affects centralization. Unlike previous studies, it attempts to clear up some of the confusion surrounding technology’s effect on centralization by distinguishing between strategic and operating decisions, and between decision-making authority and influence. As expected, PA flattened the hierarchy. It had no effect on strategic decision-making power, but surprisingly, did influence centralized line-operating authority and influence. This finding is particularly striking because firms with decentralized line-operating decision-making are more likely to adopt PA.
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