Many companies are starting to involve employees on all levels in strategic decisions, so as to curb hierarchical rigidities and integrate multiple perspectives. However, such distributed decision-making opens the door to new biases and, ultimately, suboptimal strategic decisions.

In the context of internal crowdfunding at a large industrial manufacturer, Tim Schweisfurth and his co-authors Claus Schöttl, Christina Rasch and Michael Zaggl show that employees evaluate hierarchically similar others' ideas overly favorably. Thus, hierarchy is not just a source of rivalry, but also of identification, leading to favoritism among hierarchical peers. Therefore, managers should be cautious and take measures to counteract these biases when implementing distributed decision-making.

We (the Headquarters in Austria Team) also conduct research on hierarchies and its influence on decision-making and problem solving. For example, we investigated if involvement of HQ managers can help to potentially solve non-routine problems in subsidiaries. If you want to learn more about it, here is the link to the full paper published in the prestigious Strategic Management Journal: https://onlinelibrary.wiley.com/doi/full/10.1002/smj.3495

We are thankful to eXplore! for supporting our work and helping us advance the research in this field.