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

The past decades witnessed a broad trend towards flatter organizations with lesshierarchical layers. A reduction of the number of management levels in a corporationcan have both positive and negative effects on firm performance with the neteffect being theoretically unclear ex ante. The present study uses a nationallyrepresentative data set of firms in Switzerland and empirically examines the directperformance effects of delayering. Applying ordinary least squares regressionsand propensity score matching, this study finds that delayering significantly increasessubsequent firm performance. It can be concluded that flatter hierarchicalstructures seem to enable firms to better realize their competitive advantage intoday’s fast moving and knowledge-intensive market environment.