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This article aims at summarizing several organizational functions of middle management,and clarifying their tradeoffs. Comparing a three-tier (top-middle-bottom)organizational structure with a two-tier (top-bottom) structure, we show the followingresults: (1) middle management benefits the organization only if middle managershave higher information gathering capabilities than top, as well as they serveeffective monitoring and communication roles; and (2) more communication frommiddle to top is not necessarily desirable for the organization, because of its detrimentaleffect on bottom. Result (2) arises from a tradeoff between communicationand incentives: While more communication improves project implementation by top,it discourages bottom to exert effort to generate proposals. |
