A Magic of Hierarchy: The Role of Formal Organizational Structure in Learning

Abstract

It is commonly known that bosses in an organization can lead subordinates in learning because the former have more experience and organization-related knowledge. We argue that even without such prior experience or knowledge, bosses can do better. In particular, our numerical analysis shows that subordinates are more likely to learn from their bosses than either their peers at the same rank or their subordinates when all individuals start their learning from scratch. This remarkable order in learning dynamics arises from the topological regularity inherent in a typical hierarchical structure, where different ideas and knowledge are primarily exchanged through bosses who are more exposed to diversity of ideas and knowledge than their subordinates.