Shuping Li

During my summer break, I finished reading the thought-provoking book “Why Managers Matter: The Perils of the Bosses Company” by Nicolai Foss and Peter Klein. Of course, the book fundamentally explores organizational structure and design, comparing self-organizing, bossless structures to traditional hierarchies. Nicolai and Peter employ a creative, constructive approach throughout the book's 15 chapters, consistently stating that bossless firms work only under specific conditions, such as stable environments and low interdependencies among activities. On the other hand, hierarchy—despite potential oppression—has high survival value, evident not only in corporate history but also in human history. The authors' primary rationale for their analyses is compelling from a Transaction Cost Economics (TCE) perspective: firms and markets operate under different principles; introducing market principles into firms by flattening organizational structures may only be functional under certain contingencies. Thus, the mix of centralized leadership and delegation should change over time as companies face varying circumstances. By closely examining numerous intriguing firms, the book generates wide-ranging implications for both macro and micro research beyond organizational design from a TCE perspective. For example: What are the psychological underpinnings driving employees' need for leadership? How do different leadership styles function within various organizational designs? How can we truly empower employees with or without bosses through effective job designs or psychological contracts? What roles should middle managers play in firms? What is the optimal mix of culture, incentives, monitoring, and organizational designs for driving sustainable firm growth? As I read through the chapters, I was continually amazed by the breadth and depth of the authors' knowledge base, which includes rich, in-depth analyses of numerous anecdotal firm cases spanning a wide range of industries. Additionally, their engaging writing style offers valuable lessons. All in all, I highly recommend the book. In fact, I plan to give it a second read soon! :)