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I'm not sure if I'm correct. But I know you can answer it, read each definition and try to see if def 2 or def 1 match the word in the sentence.
Sorry now that I have read it better it is Definition 1.
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It may be definition #1.
According to Wikipedia, decentralizing is the process of redistributing or dispersing functions, powers, people or things away from a central location or authority.
Definition #2 has not much relevance to the sentence; Definition #1 is more specific.
In simpler terms, decentralizing is the "transfer of decision making power and assignment of accountability and responsibility for results", to quote businessdictionary.com.
http://www.businessdictionary.com/definition/decentralization.html here is the full definition, I think it is much simpler than Wikipedia!
Sorry for quoting so much, I try to do my best to give answers backed with research. Hope this helps.
Also, thank you for the medal. I'm glad I could help you.