A rigid corporate hierarchy actually beats a flat team structure when the market gets chaotic.
April 25, 2026
Original Paper
Volatility Reverses the Horizontal-Organization Advantage: How Environmental Turbulence Inverts the Information-Accessibility Prescription for Organizational Structure
SSRN · 6634219
The Takeaway
Business experts usually preach that flat organizations are more agile during crises. This study found the exact opposite is true in highly volatile environments. Vertical structures outperform horizontal ones because they centralize information when things move too fast for distributed decision-making. Managers who strip away layers of management during a recession might be making their companies more fragile. Adding structure rather than removing it provides the stability needed to survive extreme turbulence.
From the abstract
The popular claim that information technology favors flat organizations coexists with a mixed empirical record: some self-managing firms endure for decades while others collapse. Classical contingency theory (Burns & Stalker, 1961) predicted that organic/flat structures fit turbulent environments-a prediction that modern management discourse has amplified into "AI makes flat organizations inevitable." This paper tests that prediction computationally and finds it inverted: in agent-based mode