Abstract

Drawing upon the conceptualization of firm hierarchies as cognitive systems for managing exceptions within the productive process, this paper examines the transformative impact of emerging technologies on the two hierarchical dimensions of firms, i.e., their depth and their span of control. We distinguish between two broad categories of emerging technologies: Emerging Information Technologies (EIT), encompassing IoT, AR/VR, big data analytics, cloud computing and information security upgrades, and Robotic Technologies (RT), primarily including automation and robotics. We develop a conceptual framework to hypothesize that these technologies are not neutral with respect to a firm’s hierarchy; rather, they exert nuanced and at times ambivalent effects on both its depth and the span of control. Leveraging a theoretically grounded framework, we empirically test hypotheses using rich longitudinal firm-level data from the Rilevazione Longitudinale Imprese e Lavoro (RIL) survey in Italy. Our findings reveal that EIT and RT shape hierarchical structures in distinct and subtle ways, at times fostering organizational flattening and at others strengthening hierarchy. By shedding light on the heterogeneous organizational responses to technological innovation, especially at the upper echelons of the hierarchy, this study advances the literature on institutional and organizational economics and contributes to a deeper understanding the evolving nature of firm hierarchy and technological change.

*This publication was funded by the European Union - Next Generation EU, Mission 4 Component 2, under the PRIN 2022 call, project “REWIND – Resilient Enterprises and Workers: leveraging INtangibles to address Disruptions” (2022XJHRCJ) - CUP E53D23006510006.