Market Conditions, Centralization, and Organizational Effectiveness: Contingency Theory Reconsidered

Abstract

The paper reports a study carried out in South Wales to further evaluate one of the more specific propositions derivedfrom the generalframework of the structural contingency theory of organizations. This relates the extent of centralization of decision-making in an organization to organizational effectiveness under different conditions of market competition. Both behavioral and financial measures of effectiveness are examined. The results obtained differ substantially from those obtained in previous studies carried out in India and Mexico. While it is accepted that such differences could be due to variations in cultural and economic conditions it is suggested that they may indicate significant weaknesses in contingency theory as it is presently stated.