Why managers matter: the paradox of organizing

Building on Nicolai Foss and Peter Klein’s recent book, Why Managers Matter: The Perils of the Bossless Company, and on its central argument that solving the problems of organizing (i.e., the division of labor and the integration of efforts) requires some form of hierarchy, I offer some observations on the relationship between organizations’ pursuit of social goals and the potential emergence of non-traditional hierarchical structures. I also provide a purposefully simple theory explaining why social organizations may incur over-governance and unnecessary internal transaction costs due to their preoccupation with minimizing the negative externalities of cooperation and coordination failures. Hence, I illustrate the importance of embracing a paradoxical approach to organizational design to solve this tension and its link with the advent of new hierarchical forms.