AT the end of several days of studying the internal organization of one of America's largest corporations, the author opened the final interview with the President as follows: 'Mr. President, I have concluded that you do not this business!' After giving him a moment to recover, the author continued, 'Instead you have set up an organization whereby the markets in which the company buys and sells manage the various divisions.' (This company manufactures perishable food products of a number of kinds and has to deal with frequent movements of raw materials prices and, to a lesser degree, of prices of finished products). Obviously the word 'manage' was being given a somewhat unusual meaning in this exchange, but, like many business leaders, this executive grasped the connotation. After a moment's reflection, he replied, 'That is about right.' Such is one way of characterizing the decentralization of decisionmaking in large to giant enterprises which has grown apace in American business. It introduces a concept of internal structure of the firm that has important implications for organization theory. In the extreme, an enterprise decentralized in this regard might be looked upon as a group of teams bound together by certain common objectives and the ultimate authority of the top command. Such an arrangement might affect both the efficiency of the large corporation, and its conduct in external markets and, for both reasons, have important economic implications. This organizational plan, the decentralization of decision-making, is undertaken especially as the means of effective general direction and control once the corporation has acquired certain characteristics of which large size is the most frequent. Executives are impressed by the lengthening of lines of communication even before the enterprise reaches giant scale. By the same token, and in the absence of decentralization, the number of decisions that a handful of executives must make mounts at least proportionately. Furthermore, they make their choices at increasingly greater distances, in time and in the number of layers of transmittal, from the primary sources of information. No wonder they see creeping inefficiency in the wings. To offset that tendency, most operating decisions are pushed nearer to the source of the primary information. That unburdens the top executives so that they can devote their time to the coordinating, planning and 7