Team Empowerment and the Organizational Context: Decentralization and the Contrasting Effects of Formalization

A great deal is known about how managers influence team empowerment, but very little is known about what organizations do to influence empowerment. Using teams drawn from 94 Chinese high-technology companies, the authors show that organizational decentralization enhances empowerment when decision making is delegated downward even when not directly delegated to teams. Prior research has presented both a positive and negative view of formalization, and this study found that the organizational level to which formalization is applied makes a difference. Formalization of organizational processes enhances team empowerment by reducing uncertainty within the firm, whereas formalization of jobs and roles moderates the effect of decentralization and reduces team empowerment by reducing teams’ flexibility in taking advantage of decentralization. These results show the importance of organization structure as an antecedent of empowerment and highlight the contrasting effects of different types of formalization.