Title: A Theory of Non-Hierarchical Organizational Growth
Abstract: We propose a theory that explains when an organization can grow in size without increasing the extent of managerial hierarchy. We formulate a computational model in which the number of layers of managers required for a given number of producers depends critically on how production is organized. However, the distinctive feature of our approach is that we conceptually separate the organization design of production activities from the shape of the managerial hierarchy. The central insight is that, the localization of conflicts between teams is an effective approach to keeping managerial hierarchies flat than modularizing work within teams or creating non-hierarchical teams per-se. Our model also offers insights about how the initial decisions of division of labor that founders make impact the scalability of managerial hierarchy.
Publication Year: 2020
Publication Date: 2020-07-29
Language: en
Type: article
Indexed In: ['crossref']
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