Abstract for: The dangers of centralized, algorithmic management: A model

We present a model of centralized decision-making in organizations. The model's results reveal a serious drawback of centralized management practices (which are becoming pervasive with the rise of algorithmic management): Operations across the entire organization can become paralyzed when the arrival rate of exogenous disruptions rises above a threshold. To avoid system-wide failures from centralized decision-making, organizations should invest in decentralized decision-making capabilities and monitoring systems to trigger the switch from centralized to decentralized operation modes.