Centralization and decentralization in departmentalization processes: a review of the literature

Abstract

Centralization and decentralization are two opposing terms referring to processes of administration and control of authority, on the other hand, departmental is a process that consists of grouping the functions of the company according to the nature of the activities. The objectives of this article are to define the concepts of centralization, decentralization and departmental development and to analyze the impact of both models on departmental processes. To achieve the objectives set, a systematic review of the literature was carried out, which consisted of scientific articles from high-impact sources (Q1 and Q2), obtained through search strategies. Based on the analysis of the revised information, it was evident that there is very little flow of ideas in centralized organizations, as well as other aspects that hinder innovation and good performance, However, it is beneficial when applied in small businesses as decision-making is much faster. It was also found that there is greater operational dynamism in decentralized organizations, but its application to start-ups is not beneficial as more control is needed. From the research, it was obtained that, although the model of the organization depends on the size of the organization, centralization has more disadvantages than decentralization, the latter being the best way of organization for departmental companies.