Cognitive Limitations Even if central management had good local information those managers would face another problem.
In a large, complex organization operating in diverse markets with hundreds or thousands of different products, no one person has the expertise and training needed to process and use all of the information.
Cognitive limitation means that individuals with specialized skills would still be needed.
Rather than having different individuals at headquarters for every specialized area, why not let these individuals have direct responsibility in the field?
In this way, the firm can avoid the cost and bother of collecting and transmitting local information to headquarters.
The structure of American business is changing.
No longer are middle managers individuals with “people skills” and organization skills only.
They must have specific fields of expertise in addition to managerial talent.
For example, a middle manager in a bank may refer to herself as a financial specialist even though she manages 20 people. The capability to add skilled expertise is seen as crucial in today’s downsized environment.