A Generalized Goal Decomposition Model

A decomposition model is developed which can be interpreted as a representation of decision-making in a three-level hierarchical organization. The central unit coordinates decision activity by generating goals for a subordinate level of management units. These latter are responsible for generating the economic indicators that (1) allow the central unit to evaluate its goal generating policies, and (2) guide the alternative generation activities of third level operating units. Because of the absence of a global objective function for the organization the decision activity is shown to be dependent on the structure of the organization (i.e., the solutions of the model are affected by the structure and degree of decomposition). Thus, unlike existing decomposition models, the model treats organization structure as a variable in the decision-making process. This feature of the model is shown to have implications for organizational design.