Delayering and Firm Performance: Evidence from Swiss firm-level Data

Abstract

The past decades witnessed a broad trend towards flatter organizations with less hierarchical layers. A reduction of the number of management levels in a corpora- tion can have both positive and negative effects on firm performance with the net effect being theoretically unclear ex ante. The present study uses a nationally representative� data� set� of firms� in Switzerland� and empirically� examines� the� di- rect performance effects of delayering. Applying ordinary least squares regressions and propensity� score� matching,� this� study� finds� that� delayering significantly� increases subsequent firm performance. It can be concluded that flatter hierarchical structures seem to enable firms to better realize their competitive advantage in today’s fast moving and knowledge-intensive market environment.