Preferences for Decentralized Organizing: A Negotiation Perspective

Individual preferences for decentralized organizing can play an important role in explaining the existence and performance of “flat” firms like Valve and Buurtzorg, online communities (such as those engaged in open-source software development), and Decentralized Autonomous Organizations (DAOs). However, these preferences have not so far been systematically investigated. Through a series of studies, the authors document a robust pattern of preferences for highly decentralized decision-making about interpersonal interactions, but for highly centralized decision-making about compensation. For other design dimensions including task division, task allocation, and conflict resolution, intermediate levels of decentralization are preferred. To explain these patterns, the authors develop and validate a theoretical mechanism: individuals prefer greater centralization when they anticipate higher interpersonal conflict from decentralized negotiation processes. Through this mechanism, they explain variation in decentralization preferences across design dimensions. Our findings contribute to research on non-hierarchical organizations, social hierarchy, and negotiation.