Illegitimi Non Carborundum: The External Control of Distributed Decision-Making Organizations

The increasing pace of change in the global business environment has exposed the limitations of the predominant business organizational form, the bureaucratic hierarchy. As business organizations wake up to a new technological, business, or cultural paradigm seemingly every day, rigid hierarchical structures prove slow to adapt and large organizations find themselves consistently losing out to small, innovative startups. This trend has spawned new academic and practitioner interest in alternative organizational forms. Among these forms, the distributed decision-making organization (DDO), an organization that has distributed decision-making authority throughout the company, eliminating most hierarchy within the company, has been a particular focus due to its novelty and demonstrated success. The academic and practitioner literature to date has focused largely on 1) case studies of DDOs, 2) assessing the efficacy of the form, 3) describing the organizational practices of DDOs, and 4) distinguishing and delineating the various sub-forms within the DDO category. Relatively little academic or practitioner focus has been dedicated to analyzing constraints on the form, and even then, the focus has been on internal constraints, such as employee attitudes, reluctant managers, and internal power dynamics. In this thesis, I analyze how external forces constrain, control, and influence two types of distributed decision-making organizations: radically decentralized organizations (RDOs) and self-managed organizations (SMOs). The hierarchical assumptions entrenched in the global business environment, in law, regulation, norms, and attitudes, are anathema to the principles and practices of DDOs and thus present a unique potential to constrain and influence these organizations. In this thesis, I analyze how these assumptions operate on DDOs to influence their organizational practices, frustrate their organizational objectives, and, particularly in times of crisis and transition, even threaten their existence. I will look at both the theoretical foundations for the external control over DDOs and examples of this control from firsthand and secondhand sources. Throughout, I will offer examples of how DDOs have mitigated the influence of these external forces or, in some cases, have succumbed to external pressures in ways that violate their core principles. It is my hope that, through this thesis, I will be able to demonstrate that the external constraints on DDOs, though sometimes great, are rarely insurmountable.