Innovation and centralisation: A myth

Is it possible to remain innovative through a centralised organisational management structure?

Drawing a parallel to a centralised and decentralised economy, Qian and Xu (1992) argued that screening mechanism for innovative projects within a centralised system is highly bureaucratic and delays innovation. More importantly it leads to the ‘too-late-to stop’ phenomenon and sub optimal projects get through in more than one occasion. Lundvall (2010) too agrees that the degree of centralisation is negatively related to initiation of innovation.

Heek (1999) looks at the centralised vs decentralised provision of IT within public sector organisations. The key feature of centralisation is cited as efficiency gains but points towards 1) delayed decision making 2) limited flexibility as focus on core global themes usually dictated by a select few 3) Increased dependence and vulnerability. Heek recommends a ‘core-periphery’ approach where “defining certain types of information system as suitable for central development, and others as suitable for decentralised/end-user development. Decisions about how to classify project proposals for particular information systems can be made by a joint team of managers with technical staff input. This team will allocate central resources only to projects meeting agreed criteria.


Qian, Yingyi and Xu, Cheng-Gang (1992) Innovation and financial constraints centralised and decentralised economies. CEP Discussion Papers, CEPDP109. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

Leave a Reply

Your email address will not be published. Required fields are marked *