A-Z Popular Blog Authority Search »
Governance
 Advertisements
Accountability

Business Ethics

Accountability Measures

Business Stakeholders

Control

6 Examples of Centralization

 ,
Centralization is the concentration of control in a single organization, team, location or structure. The following are illustrative examples.

Technology

Technology can have a strong centralizing effect. For example, a banking algorithm that makes all credit approval decisions for a bank where this was previously assigned to bank managers in each community.

Hierarchies

A hierarchy is an organizational structure whereby an individual has authority over other individuals who have authority over other individuals thus creating layers of authority. This results in complete control by a single individual or small team that is typically delegated to varying degrees. Hierarchies are a practical way for an organization to follow a single strategy but can also be inefficient where all decisions are made in a top-down manner whereby people closest to each situation are powerless.

Central Planning

All current forms of government represent a form of centralized control. At the far extreme of this are communist governments that completely control all economic decisions in a system known as central planning. Under this system, a bureaucratic elite decides what will be produced, how it will be produced, how labor will be assigned to work and how goods will be distributed. This is extremely inefficient and tends to produce waste, decline and low quality of life.

Regulations & Standards

Regulations and similar rules such as standards serve to centralize design, decision making and policy. For example, a city with strict and detailed building codes such that houses end up looking much the same with little possibility of innovation or creative expression. Such codes may also have a great number of advantages such as making buildings safer and reducing conflict between neighbors.

Broadcast Media

Broadcast media is media that originates from a single source that is transmitted to a large audience. Communication in the 20th century was dominated by broadcast media such as television, radio and newspapers such that a small number of media companies exercised large scale influence.

Globalization

Organizations can be established at the international level in an attempt to apply centralized controls to all nations. Alternatively, large nations with a great deal of hard and soft power can apply controls to all nations that want to engage with that nation in trade or to avoid punitive measures.

Advantages


Centralization has several potential benefits:

Standardization
Allows experts to design reasonable standards that are then followed by all.

Consistency
Provides consistency such as decisions that are always made according to the same criteria.

Strategy at Scale
Allows large societies, organizations and cities to pursue strategy at great scale. This can produce efficiencies known as economies of scale.

Pursuit of Common Interests
Allows a large group to pursue common interests such as solving an environmental problem with a unified strategy.

Disadvantages


Centralization has several potential disadvantages:

Decision Distance
Top-down decision makers are often far from the nuances of each situation such that they may make suboptimal decisions. For example, an airline customer service policy set in a head office that fails to anticipate thousands of unique service scenarios that occur in the field such that the airline ends up with regulatory, reputational, customer satisfaction and legal issues.

Diseconomies of Scale
Large centralized structures suffer from inefficiencies known as diseconomies of scale. For example, large bureaucracies may take 5 years to do something that a small company could do in 5 days due to the inherent costs of moving a large organization such as communication complexity.

Creativity & Innovation
The bureaucratic elite that hold centralized power aren't often very creative, imaginative or innovative. The skills required to rise to the top of a bureaucracy tend to run contrary to the talents required for creativity.

Diversity
Centralization can be harmful to intellectual and cultural diversity. As a counterexample, giving power to cities as opposed to central governments allows those cities to pursue their own unique culture, economic opportunities and quality of life initiatives.

Elite Capture
By placing power in a small elite, there is a chance that they will become corrupt or unduly influenced by special interests.

Intelligence Shortfall
Centralization often can't compete with decentralized intelligence whereby millions of individuals compete to produce optimal strategies and decisions. For example, a free market for goods and labor is several orders of magnitude more efficient than central planning of an economy.

Participation
Centralization can represent an oppressive system whereby people have no participation in the decisions that impact their lives. For example, an international organization that creates rules that impact people who have no influence whatsoever over such rules. This is a recipe for instability, revolt and revolution.
Overview: Centralization
Type
Definition
The concentration of control in a single organization, team, location or structure.
Also Known As
Centralisation
Related Concepts

Society

This is the complete list of articles we have written about society.
Broken Windows
Centralization
Cities
Civic Duty
Civilization
Collectivism
Communism
Community
Conformity
Consumer Society
Culture
Culture Lag
Decorum
Democracy
Duty
Economic Systems
Education
Equality
Freedom
Group Harmony
Herd Behavior
Herd Mentality
Identity
Ideology
Justice
Media Freedom
Medicalization
Middle Class
Mores
Multiculturalism
Paternalism
Power Distance
Public Sector
Resilience
Responsibility
Rights
Rules
Social Capital
Social Class
Social Constructs
Social Mobility
Social Status
Society
Systems
Technocracy
Tolerance
Traditions
Upper Class
Upward Mobility
Working Class
Try our search:


If you enjoyed this page, please consider bookmarking Simplicable.
 

Society

The definition of society with examples.

Worldview

The definition of worldview with examples.

Culture Lag

The definition of culture lag with examples.

Upward Mobility

The definition of upward mobility with examples of factors that contribute to it.

Group Harmony

The definition of group harmony with examples.

Public Sector

A complete overview of the public sector with examples.

Public Sector vs Private Sector

The difference between the public and private sector explained.

Herd Mentality

The definition of herd mentality with examples.

Authority

An overview of authority.

Words For Authority

A list of words for authority.

Informal Authority

The definition of informal authority with examples.

Petty Authority

An overview of petty authority.

Authoritarian Personality

The definition of authoritarian personality with examples.

Charismatic Authority

An overview of charismatic authority.

Public Authority

The three distinct types of public authority.

Authority Examples

The common types of authority with examples.

Authoritarian Leadership

The definition of authoritarian leadership with examples.
The most popular articles on Simplicable in the past day.

New Articles

Recent posts or updates on Simplicable.
Site Map