How Technology Affects the Level of Decision Making

The usual intuitive view about the impact of technology on corporate decision making is that it tends to move that decision making down to lower levels, by empowering the lower level personnel with greater information. A recent study, however, indicates this is not necessarily true.

The study was carried out by professors of Harvard, Stanford and the London School of Economics. The research team evaluated data from some 1000 companies in eight countries. They reviewed various different non-production decisions such as hiring as well as a selection of production decisions, such as scheduling. They also included the impacts of different technology roll-outs which might have factored into the decisions.

Their hypothesis was quite insightful - that large infrastructure IT investments would tend to drive the decisions to a lower level and that an increase in communications technologies would drive the decision making upwards. Research in the past has tended to confirm the first element of the hypothesis in any event. On the other hand, the second element might be counterintuitive to some people. However, both aspects of this hypothesis were confirmed by the research.

The theory is that communications technologies make it easier for personnel to ask their bosses for input on key decisions., They also make it easier for the bosses to communicate their decisions and to monitor events at the lower levels. So the executives end up making  more of the decisions.

For a write up on the research, check out this article.