Advanced Manufacturing Technology and Organization Structure: Empowerment or Subordination?

Advanced manufacturing technology (AMT) includes such technologies as computer-aided design (CAD) and manufacturing (CAM), as well as computer-integrated manufacturing (CIM). Numerous case studies have found that organization structure (e.g., centralization of decision making) changes when firms introduce AMT, but the findings from such studies have been inconsistent. This paper reports the findings of a large-sample study of the relationship between AMT and organization structure. Two alternative patterns in the relationship between these two concepts were considered. The Marxist perspective, which holds that automation is used by managers as a tool to subordinate the workforce, leads to predictions that AMT will be associated with increasing differentiation (more hierarchical levels and job classifications), centralized decision making, and high levels of formalization (management by rules). The Idealist perspective, which involves the belief that managers should use new technologies to empower the workforce, leads to predictions that AMT will be associated with less differentiation, decentralized decision making, and limited formalization. The study was conducted using questionnaires, which were returned by general managers from 185 firms in the metalworking industries (SIC codes 33-37). The findings provide some support for both perspectives, as AMT was associated with both decentralization of decision making and formalization. We interpret these results as stemming from the characteristics of AMT, particularly integration, flexibility, and risk. Seen in this light, organizations have less need to centralize decisions, as AMT's capacity for integration allows information to be brought together at lower levels of the firm, and its flexibility allows departments to more easily adapt to decisions made by other departments. The risk and expense associated with AMT, however, may lead firms to institutionalize those practices associated with effective use of the technology through formal rules. In other words, formalization may be a mechanism for safely decentralizing. In general, researchers are urged to strike a balance between focusing on the intentions of management and the constraints of the technology when they study technology and organization.