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The Hierarchical Erosion Effect: A New Perspective on Perceptual Differences and Business Performance
Author(s) -
Gibson Cristina B.,
Birkinshaw Julian,
McDaniel Sumpter Dana,
Ambos Tina
Publication year - 2019
Publication title -
journal of management studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.398
H-Index - 184
eISSN - 1467-6486
pISSN - 0022-2380
DOI - 10.1111/joms.12443
Subject(s) - hierarchy , perception , multilevel model , perspective (graphical) , strategic business unit , hierarchical database model , hierarchical organization , unit (ring theory) , work (physics) , business , knowledge management , marketing , psychology , computer science , economics , management , data mining , artificial intelligence , mechanical engineering , mathematics education , machine learning , neuroscience , engineering , market economy
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 favourable 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 favourability 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.