ABSTRACT
"Decentralization" has become exceedingly popular with American business and is being hawked around widely as the cure-all for the ills of industrial society. It is still widely used in its original meaning, as the functional delegation of authority and responsibility, that is, as the opposite to centralization. Functional decentralization does not solve the structural problems of management organization and management function. A federal organization also offers the best way to overcome the overspecialization and overdepartmentalization which the modern enterprise breeds. The federal principle can be applied only where all units of the enterprise are essentially in the same business. The enterprises that are not capable of a federal organization can never go beyond functional and geographic decentralization, which may greatly relieve but can never solve the problems of a functioning management. Even when federalism is fully applicable it is not a panacea for the problems of management organization.
