Constitutional Systems of Authority: Enabling Legitimate Centralization in Decentralized Organizations



Decentralized organizations face situations where temporary centralization of decision-making is useful or necessary. However, centralization risks undermining the internal legitimacy of the decentralized system. Through a comparative case study of four decentralized organizations that centralized authority during the COVID crisis, we identify two factors that allow decentralized organizations to flexibly centralize without undermining internal legitimacy. First, we find that a set of explicit rules governing both the distribution of authority as well as how authority could be changed facilitates the centralization of decision making while preserving the legitimacy of the broader decentralized system. We conceptualize this set of rules as a constitutional system of authority. The degree of openness and care displayed by leadership in enacting centralized authority serves as a secondary factor that supports perceptions of legitimacy during centralization. This study builds theory regarding the factors that contribute to the durability of decentralized organizing, prompting a reappraisal of decentralized organizing as fragile. Furthermore, this study compels a broadened conceptualization of decentralization that captures not only the distribution of operational authority but also the distribution of rule-making authority.

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