Formal hierarchical differentiation is a cornerstone of the organizing process. Prior research has focused primarily on pyramid-shaped formal hierarchies, despite documented limitations of the pyramid structure. We adopt a multi-method approach to consider the utility of alternative hierarchical shapes. First, we identify six “pure type” formal hierarchies that teams might employ. Next, we develop three propositions explaining the effects of hierarchy on team members’ cognition and behavior. We use the propositions to parameterize an agent-based computational model in which formal hierarchical differentiation influences team performance by creating power imbalances that affect team members’ perspective-taking motivation, and by influencing members’ social identification with the team. The modeling results reveal how the effects of the six hierarchies are contingent upon task characteristics that influence team members’ perspective-taking accuracy (e.g., task variety), and enable us to craft an expanded, team-level theory of the association between formal hierarchical differentiation and team performance. A field study of 68 clinical nursing shifts in five mid-sized hospitals supports a key theoretical prediction. Specifically, we find that a negatively skewed (inverse pyramid–shaped) formal hierarchy enhances team performance relatively to a positively skewed (pyramid-shaped) hierarchy when task variety is high, but not when task variety is low.
ASJC Scopus subject areas
- Business and International Management
- Business, Management and Accounting(all)
- Strategy and Management
- Management of Technology and Innovation