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Decentralization, Strategy, and Effectiveness of Strategic Business Units in Multibusiness Organizations

Vijay Govindarajan
The Academy of Management Review
Vol. 11, No. 4 (Oct., 1986), pp. 844-856
Published by: Academy of Management
Stable URL: http://www.jstor.org/stable/258401
Page Count: 13
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Decentralization, Strategy, and Effectiveness of Strategic Business Units in Multibusiness Organizations
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Abstract

The relationship between decentralization and the effectiveness of strategic business units (SBUs) within multibusiness organizations is examined. Three strategic continua are considered-Gupta and Govindarajan's (1984) build-harvest, Porter's (1980) differentiation-low cost, and Miles and Snow's (1978) prospector-defender; in each case it is proposed that the degree of decentralization of decision-making authority delegated to the general manager of the SBU should be closely aligned with the SBU's strategy to optimize the effectiveness of the SBU.

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