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

Abstract

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 that biases idea evaluation decisions. Using a data set from internal crowdfunding at one of the world's largest industrial manufacturers, we show that idea evaluators overvalue hierarchically similar others’ ideas. Competition in the form of lateral closeness dampens this bias, whereas uncertainty in the form of novelty amplifies this bias. We contribute to the literatures on decision biases in centralized vs. distributed innovation and on structural similarity as a driver of employee behaviors.