Are Less Hierarchical Firms Organized Around Stronger Cultures? Evidence From Big Data

Research Summary: Are less hierarchical firms organized around stronger cultures instead? The authors analyze 1.5million employee reviews on Glassdoor.com from 23,000 US-based firms, alongside data on managerial hierarchy estimated from 42 million professional social media profiles. Their findings confirm a negative association between managerial hierarchy and organizational culture strength. They explore two potential explanations for this association: Functional equivalence between the two, and culture fragmentation caused by manage-rial hierarchy. Multiple correlational tests show sup-port for functional equivalence as a plausible explanation for the observed negative correlation. The authors findings enhance our understanding of the complex relationships between organizational structure and culture utilizing Big Data methods. Managerial Summary: Can strong cultures, i.e., systems of widely shared beliefs and values converging on a few organizational dimensions, be an alternative to managerial hierarchy to align the work of employees? The authors analysis of 1.5 million Glassdoor employee reviews and 42 million professional profiles from 23,000 U.S.firms shows that organizations with stronger cultures do indeed have a lower fraction of managers to total employees. This suggests that attempts to “flatten” hierarchies by eliminating layers of managers is more likely to succeed if accompanied by efforts to build strong cultures, through mechanisms such as careful selection and socialization of workers.