DIVISIONALIZATION IN THE UK - DIVERSITY, SIZE AND THE DEVOLUTION OF BARGAINING

Business historians and theorists of organization have portrayed the d ivisionalized (M-form) organization as a response to the problems pose d by diversity and, to a lesser extent, size. Assuming a drift towards optimal forms of organization, this implies that there should be a cr oss-sectional association between diversity, size and the incidence of the divisionalized form. This paper presents data from a survey of la rge UK companies which is only partly consistent with these expectatio ns. The more diverse companies tend to be organised either in the divi sionalized or the holding company form, whilst there is no size effect in the sense that divisionalized companies tend to be larger than the rest. There are size effects, however, on particular aspects of divis ionalization. First, companies with levels of organization intermediat e between their business units and headquarters tend to be larger than those which do not. Second, amongst companies without intermediate le vels, size is associated with the reporting against target of profitab ility at business-unit level. This suggests that the introduction of i ntermediate levels or profitability targets might be alternatives in t he earlier stages of company growth. With the exception of earlier wor k by Marginson (1985, 1988), the possible relevance of the divisionali zed structure to the control of labour has been ignored. Marginson fou nd some evidence that the M-form organization was associated with a ra ising of the bargaining level to that of the division as a response to the plant-level trade union strength during the 1960s and 1970s. In t he present era of comparative trade-union weakness, this paper argues that the divisionalized structure offers a means of maintaining outlin e control of a devolved bargaining process which is able to adapt to l ocal contingencies. Partly consistent with this expectation, our data show that the M-form company is associated with a devolution of pay ba rgaining to the level of the individual establishment, although this i s also true of the H-form. Consistent with the argument from trade-uni on weakness, this is a relatively recent development. In M-form and H- form companies, devolved bargaining tends to be accompanied by genuine managerial autonomy on pay issues. In other forms of organization, es tablishment-level bargaining occurs within the framework of tight head quarters control, so that the devolution is more apparent than real.