In a decentralized organizational structure, decision-making authority is delegated to lower levels. This reduces the effectiveness of direct supervision and formal, bureaucratic controls. To ensure that empowered employees make decisions consistent with the organization's strategic objectives, the organization must rely more heavily on informal control mechanisms. A strong, shared organizational culture acts as a powerful form of social or "clan" control, guiding behavior and fostering goal congruence without the need for constant oversight or rigid rules.

B. Clear expectations are important in any well-managed organization, including highly centralized ones where expectations are communicated through detailed rules and direct orders. It is not a unique characteristic of decentralization.

C. Electronic monitoring represents a form of tight, centralized control. It is contrary to the principles of trust and autonomy that are fundamental to a decentralized structure.

D. A defined code of conduct is a formal control mechanism. While present in most organizations, decentralized structures place a greater emphasis on the pervasive, informal guidance of culture rather than relying solely on formal rules.

1. Ouchi

W. G. (1980). Markets

Bureaucracies

and Clans. Administrative Science Quarterly

25(1)

129–141. Ouchi's theory posits that "clan control" (based on shared values

norms

and culture) is a primary control mechanism in organizations where tasks are ambiguous and teamwork is high

conditions often associated with decentralized structures. It serves as an alternative to bureaucratic (rules-based) and market (price-based) controls. (DOI: https://doi.org/10.2307/2392231)

2. Daft

R. L. (2015). Organization Theory and Design (12th ed.). Cengage Learning. In discussions on the relationship between strategy

structure

and control

textbooks like Daft's explain that decentralized structures often substitute formalization and centralization with socialization and a strong culture to achieve coordination and control. (See Chapter 5: Interorganizational Relationships

and Chapter 10: Organizational Culture and Ethical Values).

3. The Institute of Internal Auditors (IIA). (2017). International Professional Practices Framework (IPPF). Standard 2110: Governance. The commentary for this standard notes that the internal audit activity must assess and make appropriate recommendations to improve the organization’s governance processes for

among other things

"promoting appropriate ethics and values within the organization." In a decentralized model

ensuring these values are embedded in the culture is the primary mechanism for effective governance.