The hierarchical erosion effect: a new perspective on perceptual differences and business performance

Gibson, C, Birkinshaw, J, McDaniel Sumpter, D and Ambos, T C (2019) The hierarchical erosion effect: a new perspective on perceptual differences and business performance. Journal of Management Studies, 56 (8). pp. 1713-1747. ISSN 0022-2380 OPEN ACCESS


Organizations are coalitions of individuals with heterogeneous interests and perceptions (March and Simon, 1958/1993). We examine an important source of heterogeneity, namely the different perceptions individuals hold across hierarchical levels. We introduce the notion of a hierarchical erosion effect whereby individual perceptions about specific practices become less favorable the lower one goes in the hierarchy. Using data from 4,243 employees across four levels in 38 business units, we provide evidence that this effect exists, controlling for other factors, including the overall favorability of the business unit culture across eight practices. We show how the size of this hierarchical erosion effect varies depending on the nature of the organizational practice being evaluated and the extent to which executives share strategic information widely, and we also show that a lower hierarchical erosion effect is correlated with higher business unit growth. In doing so, we enrich understanding of two aspects of March and Simon’s work, their notion of intra-organizational heterogeneity and their distinctive view of the nature of hierarchy.

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Item Type: Article
Subject Areas: Strategy and Entrepreneurship
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© 2019 Journal of Management Studies: published by Society for the Advancement of Management Studies and John Wiley & Sons Ltd

Date Deposited: 03 Apr 2019 20:08
Date of first compliant deposit: 11 Mar 2019
Subjects: Staff organisation
Last Modified: 30 May 2024 01:50

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