Points to stress This discussion recognises that information asymmetry underlies the major advantages and disadvantages of decentralisation. Lower-level managers have superior information regarding their jobs and if appropriately used indecision making, the company as a whole will benefit called flexibility gain. However, the lower-level managers may use their information (to which top management is not privy) to improve their own unit’s performance, even at the expense of the profitability of the organisation as a whole. Thus, decentralisation engenders costs in the form of top management’s loss of control over subordinates.
