Specialization Theory breaks down large jobs into smaller jobs that are assigned to workers. The division of labour creates a specialized knowledge of a task, saves labor time and increase productivity.

Specialization Theory is better knowns as Division of Labour. The theory was first recognized in Adam Smith’s book “Wealth of Nations,” published in 1776.

How Does Specialization Theory Work?

Specialization Theory

The output of each step is the input of the next. For example, pin makers were organized with one making the head, another the body, each using different equipment.

Organizing the creation of pins into a sequence of specialized jobs increases the total output that a group of people can produce.

What are the downsides of Specialization Theory?

  • People dislike repetition

  • Can lead to loss of skill

  • High cost of training workers

  • Machinery eventually replaces people