Abstract
AbstractOrganizations 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.
Highlights
The ideas of James March and Herbert Simon, as expressed in Organizations (1958/1993) and in their many related works, have had an enormous impact on the field of organization studies over the last sixty years
Using survey data from 4,234 employees in 38 business units, we show the existence of a hierarchical erosion effect, controlling for other factors, and we seek to understand why this effect might be stronger in certain situations than in others
Our expectation is that the perceptions of favourability are likely to erode across levels, such that favourability decreases as one descends each successive level in the hierarchy of the organization. Why would this hierarchical erosion effect occur? We argue that an important mechanism pertains to identification, which refers to a sense of belongingness that people experience when they perceive that their relationship with a referent is critical to their self-definition (Ashforth et al, 2008)
Summary
The ideas of James March and Herbert Simon, as expressed in Organizations (1958/1993) and in their many related works, have had an enormous impact on the field of organization studies over the last sixty years Basic concepts such as bounded rationality, problemistic search and organizational routines, as well as entire sub-fields of research, such as organizational learning, the attention-based view, and the behavioural view, can all be traced back to the collaboration between March and Simon in the 1950s at Carnegie Mellon University. 144), arising partly through the role positions they are assigned, and partly through their enactment of those roles Perhaps because these perceptual differences are measurable, typically through surveys, they have been well studied in a number of literatures spanning organizational behaviour and strategic management. They found only partial statistical support for this hypotheses in their metaanalysis, while other studies (see e.g., Floyd and Wooldridge, 1992; Homburg et al, 1999) have provided evidence that a manager’s decision-making context (i.e., whether at corporate level or in a strategic business unit) will have important effects on the degree of consensus
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