This paper addresses the issue of decentralization between the headquarters and affiliates of diversified firms. Existing research provides conflicting prescriptions regarding decentralization depending on whether one takes the perspective of corporate headquarters or the affiliate. Research adopting the corporate headquarters perspective argues that the level of decentralization between headquarters and affiliates should be determined by the diversification strategy, while research adopting the affiliate perspective argues that the level of decentralization should be differentiated according to each affiliate's strategic characteristics. This paper presents a logic that can integrate these conflicting views by simultaneously considering corporate-level and affiliate-level research, and demonstrates the validity of the integrated theory through empirical analysis. The hypothesis testing results yielded the following conclusions. First, the corporate headquarters logic that the level of decentralization between headquarters and affiliates is determined by the type of diversification strategy is applicable only when affiliates pursue a differentiation strategy with a high level of resource endowment and when affiliates pursue a low-cost strategy with a low level of resource endowment. Second, the business-unit level logic that the level of decentralization between headquarters and affiliates is determined by the competitive strategies pursued by affiliates is limited to cases where the firm pursues an unrelated diversification strategy with a high level of affiliate resource endowment and cases where the firm pursues a related diversification strategy with a low level of affiliate resource endowment. The significance of this paper lies in presenting a theory regarding under which circumstances corporate headquarters logic applies and under which circumstances affiliate logic takes precedence with respect to decentralization, and in demonstrating this through empirical analysis.