Publications
Publications
- 2009
The Flattening Firm and Product Market Competition: The Effect of Trade Liberalization on Corporate Hierarchies
By: Maria Guadalupe and Julie Wulf
Abstract
This paper establishes a causal effect of product market competition on various characteristics of organizational design. Using a unique panel-dataset on firm hierarchies of large U.S. firms (1986-1999) and a quasi-natural experiment (trade liberalization), we find that competition leads firms to flatten their hierarchies: (i) firms reduce the number of positions between the CEO and division managers and (ii) increase the number of positions reporting directly to the CEO. The results illustrate how firms redesign their organizational structure through a set of complementary choices in response to changes in their environment. We discuss several possible interpretations of these changes.
Keywords
Trade; Managerial Roles; Organizational Change and Adaptation; Organizational Design; Organizational Structure; Business Strategy; Competitive Strategy
Citation
Guadalupe, Maria, and Julie Wulf. "The Flattening Firm and Product Market Competition: The Effect of Trade Liberalization on Corporate Hierarchies." December 2009.