The Fit and the Pendulum

“An astute observer of large corporations, Professor Todd R. Zenger noticed that many companies appeared to switch back and forth irrationally between a centralized and decentralized structure. Traditional organizational theory dictates that organizations choose a structure based on the notion of “contingent fit.” That is, an organization’s structure is matched to market strategies, exchange conditions, or the environment. As long as these factors remain stable, the organization will maintain a stable structure.

But Zenger heard a different story from his MBA students, many of whom worked at the nation’s largest corporations.

Together with Jackson A. Nickerson, Zenger decided to reconcile the observations of his students with a theory that explained why companies vacillate in their structural choices.”

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