Distributed decision‐making in the shadow of hierarchy: How hierarchical similarity biases idea evaluation

Abstract Research Summary Companies are increasingly opening up decision‐making, involving employees on all levels in distributed—and purportedly “hierarchy‐free”—decision processes. We examine how hierarchy reaches into such “democratized” systems, arguing that it is a source of homophily biases idea evaluation decisions. Using data set from internal crowdfunding at one the world's largest industrial manufacturers, we show evaluators overvalue hierarchically similar others' ideas. Competition form lateral closeness dampens this bias, whereas uncertainty novelty amplifies bias. contribute to literatures decision centralized versus distributed innovation and structural similarity as driver employee behaviors. Managerial Many companies starting involve strategic decisions, so curb hierarchical rigidities integrate multiple perspectives. However, decision‐making opens door new and, ultimately, suboptimal In context large manufacturer, evaluate ideas overly favorably. Thus, not just rivalry, but also identification, leading favoritism among peers. Further, particularly likely assess based rather than content if novel therefore hard evaluate. provide suggestions for design systems.