Corporate Hierarchy

Michael Ewens and Xavier Giroud

No 20584, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We introduce a novel measure of corporate hierarchies for over 3,100 U.S. public firms. This measure is obtained from online resumes of 7 million employees and a network estimation technique that allows us to identify hierarchical layers. Equipped with this measure, we document several facts about corporate hierarchies. Firms have on average ten hierarchical layers and a pyramidal organizational structure. More hierarchical firms have a more educated workforce, higher internal promotion rates, and longer employee tenure. Their operating performance is higher, but they face higher administrative costs. They are more active acquirers and produce more patents, but not higher-quality patents. They exhibit lower stock return volatility and operating asset volatility. We also examine how companies adjust their hierarchies in response to demand and knowledge shocks. We find that pharmaceutical companies increased their number of layers following the Covid-19 pandemic, while companies flattened their hierarchies following the adoption of artificial intelligence (AI) technologies. These findings are consistent with the theoretical predictions of existing models of corporate hierarchies.

Keywords: Organizational structure; Internal labor markets; Firm performance; Artificial intelligence (search for similar items in EconPapers)
JEL-codes: D23 J24 J53 L20 L25 O33 (search for similar items in EconPapers)
Date: 2025-08
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP20584 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:20584

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP20584

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().