Effects of Flat versus Tall Organization Structures: A Social Comparison Theory Perspective

Organizations are increasingly shifting their structures from tall hierarchies to flatter organizations. This is because organizations believe that flatter structures, where only a few hierarchies exist and many people are at the same job level, can encourage collaboration and potential improvement in organizational performance. Ironically, social comparison theory suggests that rather than bolstering collaboration, this shift could result in a culture of envy and other negative organizational consequences (e.g., reduced organizational performance). Therefore, in this study, I set out to investigate if, and how, the height of hierarchy in an organization is associated with individuals’ willingness to collaborate and overall organizational performance. In particular, I investigate the role of individuals’ motives underlying their varying comparison activities. I explore these questions using computational agent-based modeling. This approach results in both theoretical and methodological contributions. From a theoretical perspective, the simulation results suggest that self-improvement motives matter in terms of improving willingness to collaborate, whereas both self-improvement individuals and the height of organizational hierarchy in the workplace play a role in improving organizational performance. Interestingly, other comparison motives (i.e., self-evaluation and self-enhancement) do not seem to matter for the sake of improving collaboration or organizational performance. From a methodological perspective, this study provides an example of how computational modeling can be used to study and advance understanding of phenomena that interest management scholars. Indeed, simulation modeling provides a powerful methodology for advancing theory and research on complex behaviors and systems, yet this methodology has been embraced slowly in management field. I suspect part of the reason is the difficulty in understanding this methodology. The detailed descriptions of modeling procedures in this study may promote an understanding of simulation methodology and develop an appreciation of its potential contributions to management theory and research.