Delayering and firm performance : evidence from Swiss firm-level data

The past decades witnessed a broad trend towards flatter organizations with less hierarchical layers. A reduction of the number of management levels in a corporation 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 direct 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.