Divisionalization and Size: A Theoretical and Empirical Critique

Publisher Website
Google Scholar
Abstract
Previous work on large business organizations in advanced industrial countries has established that the substitution of a multidivisional for a functional structure is related to the degree of diversification. However, there also exists some theory and evidence which asserts the importance of size for divisionalization. This article examines the issue theoretically and empirically and concludes that divisionalization is more closely associated with diversification than with size, and that the former relationship predominates statistically. The argument from diversification is shown to be more cogent theoretically than that from size.