What aspect of organizational structure refers to the decision-making authority within a company?

The decision-making authority within a company is best described by the concept of centralization. In a centralized organizational structure, significant decisions are made at the top levels of management, with limited delegation of authority to lower levels. This concentration of power can lead to quicker decision-making and a unified direction within the organization, as fewer individuals are involved in the process.

Centralization contrasts with decentralization, where decision-making authority is distributed among various levels of the organization or specific departments. Companies that adopt a more decentralized approach can benefit from faster responses to local challenges and opportunities, as decisions can be made closer to the relevant context.

Formalization, division of labor, and hierarchy all relate to organizational structure but do not specifically pertain to decision-making authority. Formalization refers to the extent to which policies and procedures are documented and followed. Division of labor relates to how tasks and responsibilities are allocated among employees. Hierarchy describes the levels of authority and the reporting structure within an organization. While these aspects contribute to the overall functioning of the organization, they do not directly address the allocation of decision-making power as centralization does.