The information processing theory holds that the requirements for processing environmental information are greater if a firm has to deal more interactively with the local business stakeholders, especially consumers in a drastically changing market (Egelhoff 1982).
In the information processing theory, this experience is a critical element of a subunit's capability in gathering, analyzing, and utilizing information, which in turn impacts organizational design including autonomy establishment (Gates/Egelhoff 1986, Galbraith 1977).
The information processing theory asserts that the interdependence between two investing parties in the form of an alliance propels reciprocal information processing, which in turn requires greater autonomy granted to the alliance unit.
Finally, the information processing theory holds that the interdependence with peer units in order to perform tasks effectively also affects specification of the autonomy.
The information processing theory states that a subunit performing a task which is fairly independent from other corporate members has little need for information from or collaboration with peer subunits and little need for effective coordination and joint problem solving, thus they can be more autonomous (Tushman/Nadler 1978).
Our analysis also concurs with another view of the information processing theory in that more decision-making power should be delegated to subunits if expected gains from the external information processing increase.
Finally, we demonstrate that, although the information processing theory is not new (26 years have passed after Tushman and Nadler published their seminal article in 1978), it is still useful in analyzing organizational design in a turbulent environment such as an emerging market.
The information processing theory argues that a mismatch between these antecedents and subunit autonomy will be associated with lower organizational performance (Tushman/Nadler 1978, p.