PERCEIVED LEGITIMACY AND ITS UNDERESTIMATED EFFECTS ON TEAM PROCESSES AND TEAM PERFORMANCE

PERCEIVED LEGITIMACY AND ITS UNDERESTIMATED EFFECTS ON TEAM PROCESSES AND TEAM PERFORMANCE

Master Thesis, MSc Human Resource Management (HRM) University of Groningen, Faculty of Economics and Business

January 29, 2017

REBECCA NANNEN Studentnumber: S3071979

An den Voßbergen 109 A 26133 Oldenburg (Germany)

+49 151 15861436 r.nannen@student.rug.nl

Supervisor: Jacoba Oedzes

Acknowledgements: I would like to thank my supervisor Jacoba Oedzes for her valuable

support throughout the whole process of writing this thesis. Moreover, I would like to express

my gratitude to my family and the people close to me for their ongoing encouragement.

ABSTRACT

Research still shows ambiguity about the underlying effects of informal hierarchy steepness on team processes (i.e. coordination and conflict) as well as performance within work groups. To shed light on these equivocal findings, I introduce perceived legitimacy as a new key determinant. I propose that perceived legitimacy serves as a moderator, such that the indirect positive effect of informal hierarchy steepness on performance through coordination is strengthened under high perceived legitimacy. Respectively, the indirect negative effect of informal hierarchy steepness and performance is strengthened under low perceived legitimacy.

Analyses in a field study among 263 team members and leader in 57 work teams across diverse business settings, revealed no significant support for the hypotheses. However, my findings demonstrate strong significant results for perceived legitimacy as an important antecedent condition for coordination, conflict, and performance, and thus, advance the theory by offering new insights about team processes and team performance.

Keywords: Informal Hierarchy Steepness, Coordination, Conflict, Perceived

Legitimacy, Team Performance

INTRODUCTION

Informal hierarchies are a universal feature of groups. Scholars have argued that the omnipresence of informal hierarchies would suggest their functionality and positive consequences. Indeed, theory and research demonstrate that strong informal hierarchy can be beneficial for achieving high performance through higher coordination. For instance, the authors Halevy, Chou, Galinsky and Murnighan (2012) conducted a study in the National Basketball Association and vividly show how a steep hierarchy enhances the overall winning chances, just because they made use of the steep hierarchy´s beneficial effect on coordination.

It is needless to say that recent studies also demonstrate that informal hierarchies do not always have positive effects. For instance, scholars have suggested that steep hierarchies lead to conflicts when lower ranked members in the group´s hierarchy feel unfairly treated (Anderson

& Brown, 2010; Greer & Bendersky, 2013). So, even though some scholars have argued for hierarchies’ coordination-enhancing nature, strong influence differences in informal steep hierarchies may increasingly lead to conflicts as members may directly question and challenge their own as well as another team member´s position in the hierarchy. As a result, the overall performance is harmed (Greer & Bendersky, 2013; Bendersky & Hays, 2012).

There is substantial ambiguity whether hierarchy steepness increases or rather harms a team´s performance through mediating team processes, such as coordination and conflicts. This triggers the question of when hierarchy steepness will help or harm team performance (e.g.

Halevy et al., 2012; Gardner, 2010; Kwaadsteniet & van Dijk, 2010). Interestingly, the positive

and negative effects of informal hierarchy steepness come about under vastly different

situations, suggesting the relationship between steepness, coordination, conflict, and

performance is moderated. Specifically, hierarchies are often argued to be positive when all

group members perceive their assigned ranks as fair, and so, act in line with their assigned ranks

(Halevy Chou, & Galinsky, 2011; Magee & Galinsky, 2008; Frauendorfer, Schmid Mast,

Sanchez-Cortes, & Gatica-Perez, 2015). However, negative effects arise when group members are somehow unsatisfied with the distribution of ranks (Bendersky & Hays, 2012). Indeed, theorists argue that steep hierarchies only have a positive effect on performance when an informal hierarchy is perceived as fair, namely legitimate. Here, perceived legitimacy describes the belief that social arrangements are appropriate and assessed as fair (Tyler, 2006).

In this regard, I propose that legitimacy moderates the positive relationship between hierarchy steepness and performance through coordination, such that it strengthens this positive relationship. When the informal hierarchy is perceived as fair, and thus considered as highly legitimate, the positive effect of hierarchy steepness on coordination is stronger, and performance can be increased. Under low legitimacy, I assume that this strengthening effect is less strong, and so, coordination efforts are less efficient in increasing the performance. When members increasingly perceive their assigned rank as unjust, more conflicts arise, and performance decreases (Greer & Bendersky, 2013). When members perceive the hierarchy as rather unfair (i.e. illegitimate), I propose that the negative indirect relationship between steepness and performance is strengthened under low legitimacy. Respectively, the assumed strengthening effect is less strong when assigned ranks are perceived as fair.

I will test the hypotheses in a sample of 57 team leaders and 206 employees drawn from

a variety of work settings. In doing so, I make an important theoretical contribution. Current

work on informal hierarchies focuses mainly on informal hierarchy strength as a key defining

variable of the hierarchy. This research paper also stresses the importance of incorporating other

characteristics of the hierarchy by arguing that both characteristics affect processes and

outcomes. As such, I shed light on mixed findings with regards to the consequences of informal

hierarchy strength, and identify informal hierarchy legitimacy as an important variable that

should be incorporated in future research.

Organizations increasingly make use of work teams, in which informal hierarchies play

a vital role in shaping group processes (i.e., conflict and coordination) and outcomes (i.e.,

performance) (Halevy et al., 2012). For managers who aim at developing a high-performing

team, it is truly necessary to understand the team and the underlying group processes. Hereby,

managers of such teams often focus on managing hierarchy strength, by for example, trying to

create relatively egalitarian hierarchies in which all group members have an equal chance of

contributing to the group (Chenhall, 2008; Gruenfeld & Tiedens, 2010; Leavitt, 2005). My

research will demonstrate that managers should not only focus on managing hierarchy strength,

but need to monitor and shape the legitimacy of informal hierarchy which is also present in

such groups. Insights about the effects of perceived legitimacy then serve as an opportunity to

better evaluate reasons why the leading team suffers more from conflicts and coordinates itself

less efficiently than other teams do, resulting in a lower performance compared to others. Since

disagreements about assigned ranks in teams lead to lower satisfaction (Anderson & Brown,

2010), it is important for organizations to ensure that ranks are perceived as fair to prevent

decreasing motivation and a lower team cohesion because of increasing conflicts. Newly

developed knowledge of the underlying influence factor legitimacy helps organizations to

develop proactive measures to counteract the trend of decreasing performance. Then, a

dramatically decreasing overall performance might be prevented.

THEORY Informal hierarchy steepness

Naturally and spontaneously, members of a group develop an informal hierarchical order in which some group members – often the higher-ranked ones - have more influence compared to others (Magee & Galinsky, 2008; Anicich, Galinsky, Ronay, & Greenaway, 2012;

Frauendorfer et al., 2015; Diefenbach & Sillince, 2011). This subconsciously ongoing ordering of influence differences is based, for instance, on members´ differing competencies, experiences and/or personalities (Anderson & Brown, 2010). Mostly, informal hierarchy strength is conceptualized as steepness. When this vertical hierarchical differentiation in ranks are observed to be large, a steep hierarchy results whereas a flat (i.e. less steep) hierarchy can be observed when members are almost equally ranked (Anderson & Brown, 2010; Christie &

Barling, 2010; De Vries et al., 2006; Harrison & Klein, 2010).

It is well documented that informal hierarchy steepness shapes team processes (Anderson & Brown, 2010; Diefenbach & Sillince, 2011). In this context, research found hierarchy steepness to have direct effects on two major variables for team processes, namely coordination and conflict (Anderson & Brown, 2010). However, empirical demonstrations are rather rare: “(…) the effects of steeper hierarchies are highly mixed. Sometimes steeper hierarchies benefit groups and sometimes they harm groups” (Anderson & Brown, 2010: 1).

Research differs greatly with regard to when and why hierarchy steepness either leads to coordination or to conflicts within teams. Some scholars hold the view that hierarchy steepness leads to an increase in efficient coordination efforts (e.g. Anicich et al., 2012) whereas others have adopted the view such that hierarchy steepness leads to more conflicts within teams (e.g.

Harrison & Klein, 2007). It becomes obvious that more validation research is needed. In effort

to better understand when informal hierarchy steepness leads to increasing coordination or

increasing conflicts within teams, I introduce perceived legitimacy and its moderating effect on

the relationship between hierarchy steepness and coordination or conflict. My suggestion of including perceived legitimacy as a moderator is also in line with the idea of Halevy et al.

(2012) who propose to include other moderators such as perceived legitimacy of hierarchical differentiation and its likely effects on group processes and performance in future research.

Perceived legitimacy

Tyler (2006) defines legitimacy as “the belief that social arrangements are appropriate, proper, and just” (p. 376). Legitimacy facilitates the maintenance of a certain structural ordering within teams as it encourages members to accept those differences in this emerging ordering (Tyler 2006). Indeed, several authors assume that steep hierarchies have a positive effect on performance when an informal emerging hierarchy is perceived as fair (Halevy et al., 2011;

Magee & Galinsky, 2008; Frauendorfer et al., 2015). Whenever differences between members are prevalent, the issue of legitimacy arises (Tyler, 2006). Members might respond differently to these differences depending on the extent to how they perceive the steep hierarchy as fair (Magee & Galinsky, 2008; Tyler, 2006; Hays & Goldstein, 2015). For instance, lower-ranked members are more likely to accept their assigned ranks when the ordering and assignment of hierarchical ranks is perceived as legitimate (Tyler, 2006).

Hierarchy steepness & coordination

Coordination efforts within teams involve members using strategies and behavior patterns to efficiently align their actions in order to achieve a common goal (McGrath, Arrow,

& Berdahl, 2000). In this context, the informal ranking of team members guide the interactions

between members, such as who reports to whom, who influences whom, how information is

conveyed etc., often resulting in more coordination (Diefenbach & Sillince, 2011; He & Huang,

2011; Halevy et al., 2011). Hence, when clarity and accuracy in assigning tasks to members

with appropriate skills and influences is given, an efficient coordination can be achieved

(Gardner, 2010). This is in line with the findings of He and Huang (2011) examining that the clarity of an informal steep hierarchy facilitates the coordination of group members´

interactions. The authors conducted a study with directors of an organization´s board who immediately and subconsciously developed an informal hierarchy. This hierarchical ordering provided the directors with clear lines of direction and expectations referring to the assigned roles. Once formed, this emerging informal hierarchy affected the members´ interactions and ensured more efficient coordination. Therefore, hierarchy steepness clarifies the expectations about rank-appropriate behavior which facilitates social interactions, and importantly, coordination (Cooper & Whitey, 2009; Pfeffer & Davis-Blake, 1989; Tiedens, Unzueta, &

Young, 2007). Van Vugt, Hogan and Kaiser (2008) even state when a group aims at a high functioning, clearly assigned roles of leaders and subordinates are needed. These findings are also confirmed in the study of Anicich et al. (2012). Here, the authors found support that hierarchies in groups, based on higher- and lower-ranked individuals, benefitted from a clear direction, compared to groups with equally ranked individuals. By having clearly assigned ranks within steep hierarchies, coordination is facilitated and time-consuming discussions about tasks and processes might be prevented (Halevy et al., 2011; Magee & Galinsky, 2008; Dewar

& Werbel, 1979; Jehn, 1995; Anderson & Brown, 2010). Therefore, I hypothesize:

Hypothesis 1. Informal hierarchy steepness has a positive direct effect on coordination within teams.

Legitimacy and its moderating effect on hierarchy steepness to coordination

Research provides findings that perceived legitimacy facilitates the functioning of social

arrangements because it increases the cooperation and coordination among team members, and

subsequently, stabilizes social arrangements (Halevy et al., 2011; Tyler, 2006). For team

members, it seems to be important to perceive the hierarchy as fair to act in line with their

assigned ranks and the entailed tasks and responsibilities. This leads in turn to a more stable

hierarchy and coordination efforts are facilitated (Halevy et al., 2011). Hence, I expect that under high legitimacy, the positive relationship between hierarchy steepness and coordination is strengthened. Consequently, it can be concluded that if assigned ranks are not perceived as fair, less efficient coordination might occur. Therefore, I expect that under lower legitimacy, the strengthening effect is less strong. I assume:

Hypothesis 2. Perceived legitimacy moderates the relationship between informal hierarchy steepness and coordination within teams, such that the positive effect of informal hierarchy steepness on coordination within teams is strengthened when legitimacy is high, rather than low.

However, theory and research show that steep hierarchies should also be considered as one main cause for conflicts within teams (e.g. Demange, 2004; Halevy et al. 2011; Ronay, Greenaway, Anicich, Galinsky, 2012; Magee & Galinsky, 2008; Anderson & Brown, 2010;

Simpson, Willer, Ridgeway, 2012; Greer, 2014).

Hierarchy steepness & conflict

Conflicts within teams can take several forms. Three of them are task, relationship, and process conflicts. Task conflicts result from differing approaches on how to solve tasks.

Relationship conflicts are based on interpersonal connections and process conflicts arise inter alia from resource allocation, responsibilities and/or assigned roles (Jehn, 1997; Bendersky &

Hays, 2012). Research suggests when individuals increasingly disagree with their relative

assigned ranks, the group suffers from higher levels of conflicts (Bendersky & Hays, 2012). In

this context, Harrison and Klein (2007) emphasize that differences in informal hierarchies are

one cause for rivalry, competition for higher ranks, and so, an increase in the potential for

conflicts. This leads to the third hypothesis:

Hypothesis 3. Informal hierarchy steepness has a positive direct effect on conflict within teams.

Here, the positive relationship means that the steeper a hierarchy is, the more conflicts arise.

Legitimacy and its moderating effect on hierarchy steepness to conflict

Anderson and Brown (2010) emphasize that groups with steeper hierarchies are more likely to have less satisfied and less motivated members. One cause might be that team members perceive its assigned rank as unfair (i.e. illegitimate). If there is perceived illegitimacy, the hierarchy can be steep but it may not have the same conflict reducing effects as members are less satisfied with the hierarchical order, and so, question and even challenge the assigned ranks (Anderson & Brown, 2010; Bendersky & Hays, 2012; Kwaadsteniet & van Dijk, 2010).

Consequently, I suggest that when the steep hierarchy is perceived as rather illegitimate, more conflicts arise. In this regard, I assume that the positive relationship between hierarchy steepness and conflict is strengthened under low perceived legitimacy. For high perceived legitimacy, I expect that the relationship is less strengthened since less members perceive the hierarchy as illegitimate. So, less conflicts occur. Hence, I hypothesize:

Hypothesis 4. Perceived legitimacy moderates the relationship between informal hierarchy steepness and conflict within teams, such that the positive effect of informal hierarchy steepness on conflicts within teams is strengthened when legitimacy is low, rather than high.

Hierarchy steepness serves important functions in teams: it leads to an ordering of

members which, on the one hand reduces intragroup conflicts, and on the other hand facilitates

coordination. This in turn affects the overall performance (Halevy et al., 2011; Magee &

Galinsky, 2008; Van Vugt et al., 2008). In research and theory, there is disagreement whether hierarchies are essential and beneficial for performance or whether hierarchies rather harm a team´s performance (Anderson & Brown, 2010). In this respect, literature and research include the findings of the effects of hierarchy steepness on coordination and conflict and further introduce these two variables as mediating mechanisms of hierarchy steepness to a team´s performance (e.g. He & Huang, 2011; Bendersky & Hays, 2012). I acknowledge both possibilities and suggest that perceived legitimacy will be a key determinant of the positive and negative effects of hierarchy steepness on a team´s performance.

The mediations of coordination and conflict on hierarchy steepness to performance

Researchers argue for a positive direction of hierarchy steepness on performance by emphasizing the hierarchy´s important function to clarify different roles and responsibilities, and thus, an increase in coordination efforts (Hays & Goldstein, 2015; Halevy et al., 2011).

Recalling the example of the basketball team in the introduction, the authors Halevy et al.

(2012) show that having clearly divided tasks enhances the coordination and the team´s winning chances increase. Therefore, developing an informal hierarchy based on different skills and influences, improves the coordination, and consequently, a higher performance can be achieved (Halevy et al., 2011; Van Vugt, Hogan, & Kaiser, 2008; Anicich et al., 2012; He & Huang, 2011; Gardner, 2010).

As already mentioned, perceiving the ranks as fair leads to a stabilized hierarchy as

members are aware of their own and the others´ positions, the associated tasks, and

responsibilities. Hence, for members of a team it seems to be important to perceive the assigned

ranks as just to enhance the coordination within the team (Halevy et al., 2011). This efficient

coordination leads to a higher performance (Gardner, 2010). Respectively, I expect a

moderating effect of legitimacy on the positive indirect relationship between hierarchy

steepness and performance through coordination. I deduce that under high perceived legitimacy, the indirect positive relationship between hierarchy steepness and performance through coordination is strengthened. Subsequently, if assigned ranks are not perceived as fair, less efficient coordination might occur, and the overall performance might be harmed.

Therefore, I assume that under low legitimacy, the strengthening effect on the positive indirect relationship between hierarchy steepness and performance through coordination is less strong.

My fifth hypothesis reads as follows:

Hypothesis 5. The positive indirect effect of informal hierarchy steepness on a team´s performance through coordination within a team is strengthened when legitimacy is high, rather than low.

However, other findings suggest a negative relationship between hierarchy steepness and a team´s performance due to emerging conflicts (Behfar, Mannix, Peterson, & Trochim, 2011; De Wit, Greer, & Jehn, 2012; Passos & Caetano, 2005; Vodosek, 2007). As conflicts arise due to low satisfaction and unacceptance of assigned roles, performance may be harmed (Bendersky & Hays, 2012; Anderson & Brown, 2010). The more members challenge their position, the more the group´s performance is harmed as group members fail to coordinate efficiently (Bendersky & Hays, 2012; Kwaadsteniet & van Dijk, 2010). Here, a consensus about an individual´s hierarchical position would be important to reduce the conflict potential efficiently (Halevy et al., 2011; Gruenfeld & Tiedens, 2010). Hence, I expect the following mediation: the steeper a hierarchy is, the more the overall team´s performance is harmed because of more arising conflicts.

Members who perceive the assigned rank as unfair may even directly challenge its own

as well as others´ positions in the hierarchy and due to increasing conflicts, the overall

performance is harmed (Greer & Bendersky, 2013; Bendersky & Hays, 2012). Therefore, I propose that the negative indirect relationship between hierarchy steepness and performance through conflict is strengthened under low perceived legitimacy. When hierarchy steepness is perceived as rather illegitimate, more conflicts arise and the overall performance decreases. For high perceived legitimacy, I expect that the relationship is strengthened less strongly since less members perceive the hierarchy as illegitimate. Consequently, less conflicts occur, which leads to lower decreasing performance. I assume:

Hypothesis 6. The negative indirect effect of informal hierarchy steepness on a team´s performance through conflict within a team is strengthened when legitimacy is low, rather than high.

The conceptual model is as follows:

FIGURE 1.

Conceptual model

Hierarchy

Steepness

Coordination

Conflict

Team Performance Perceived

Legitimacy

METHODOLOGY

Sample and Procedure

In order to be able to draw general conclusions, each team had to fulfill certain requirements which needed to be proved before sending out the questionnaire. The first requirement was a) teams should consist of 4-13 team members, already including the team leader. Regarding the following requirements, the teams had to fulfill at least two of them: b) team members have common goals; c) team members are interdependent; d) team members are jointly accountable and e) the team has regular team meetings (Kozlowski & Bell, 2003). My colleagues and I relied on our individual contacts when we identified and contacted the teams.

The data was collected in teams from different industries.

Once all team members agreed on participation and requirements were fulfilled, two

questionnaires were distributed. One questionnaire was specifically created for the leader and

the other was specifically developed for the team members. Team members were asked to

answer questions about team processes with regard to conflicts and coordination within the

team. The employees were further told to rate all group members´ influence as input for the

informal hierarchy calculation. Moreover, the employees were asked how legitimate they

perceive the team´s hierarchy. The leaders were asked questions about the team´s overall

performance. Only the leaders rated the team´s performance in order to keep these ratings

independent of the process ratings the employees were asked for, and so, being able to prevent

a common-method-bias. Finally, both, the leader and the employees were asked to answer

general questions. On top of these questions, the leaders were asked to share information about

the company itself and the industry to get further insights about the sample. All data were

collected within a three-week period.

Overall, the questionnaires were sent to 80 teams, and so, to 80 team leaders, from which 61 responded, resulting in a 76% response rate. In total, 345 team members were asked and 239 of them replied. Hence, the response rate among the subordinates was 69%. Of these teams, 17 teams were dropped later since either the leader did not fill in the questionnaire or the subordinates did not fill in. Additionally, one team had been dropped out because less than 50%

of the employees finished the questionnaire. Therefore, the final sample consisted of 57 team leaders and 206 employees. The teams came from 11 branches (plus “others” as a 12

category), including construction, finance, trade and repair, ICT, industrial, education, government, postal services and telecommunication, transportation and storage, business services as well as healthcare. Most of the teams could be assigned to business services (15.8%), followed by the ICT branch and industrial branch (both 7%). The organizational size ranged from 4 to 5000 employees. In terms of team sizes, on average, the teams consisted of 5 members, including the team leader (s.d. = 1.97). The employees had an average team tenure of 3.25 years (s.d. = 2.89) and had been working for the organization on average 5.98 years (s.d. = 5.85). The leaders were part of the team for 5.05 years on average (s.d. = 5.00) and were part of the organization for 9.65 years on average (s.d. = 8.66). 44% of the employees were male, and so, 56% female. For the leaders, precisely the opposite was the case: 56% of the leader sample were male and 44%

female. On average, the employees were 31.46 years old (s.d. = 10.21) and the leaders were aged 36.04 years on average (s.d. = 10.35). Looking at the employees´ educational level, 26.7%

were high school graduates and 25.7% had bachelor´s degree whereas 33.3% of the leaders had

a bachelor´s degree and 31.6% a master´s degree.

Measures

Steepness. Based on research of Bunderson, van der Vegt, Cantimur and Rink (2016), the

degree of steepness within a team was measured by asking the employees to indicate the extent to which each team member exerts influence over themselves (1 = “not at all”; 2 = “somewhat”;

3 = “to a large extent”). Next, steepness was computed as the standard deviation of these influence scores.

Coordination. Coordination was measured with 4 items: “My team works together in a well-

coordinated fashion”; “My team has trouble coordinating the pace members want to work at”;

“My team has difficulty with timing interactions between members” and “My team sometimes experiences interruptions or delays in the flow of work behaviors” (combined scale from Janicik

& Bartell, 2003 and Lewis, 2003). Answers were given on a 7-point-Likert-scale (1 = “strongly disagree”; 7 = “strongly agree”). Three items had been reverse- coded. Due to the low percentage of missing values, the mean was used to replace the missing scores. Cronbach´s alpha for the combined four-item scale was 0.78, and aggregating statistics supported aggregating to the team level: ICC1 = .31; ICC2 = .06; mean rwg = .78.

Conflict. Conflict within a team was measured with nine items taken from Jehn (1995). The

first three items were related to relational conflicts within the team: “There is much relationship tension in our team”; “People often get angry while working in our team”; “There is much emotional conflict in our team”. The following items were considering conflicts about tasks:

“There is much conflict of ideas in our team”; “There are frequently disagreements within our

team about the task we are working on”; “People in our team often have conflicting opinions

about the task we are working on”. The last items were related to process conflicts “There are

often disagreements about who should do what in our team”; “There is much conflict in our

team about task responsibilities”; “We often disagree about resource allocation in our team”. A

7-point-Likert-scale was used, ranging from 1 (“strongly disagree”) to 7 (“strongly agree”).

Cronbach´s alpha for the combined nine-item scale was 0.91 and aggregating statistics supported aggregating to the team level: ICC1 = .32; ICC2 = .63; mean rwg = .75.

Legitimacy. How legitimate employees perceive the hierarchy was measured by the following

five items (self-developed): “Team members’ influence level is based on their knowledge or competence”; “Team members’ influence level is based on their contribution to team success”;

“Within my team, people have justly obtained influence over decisions”; “Within my team, the right people have influence over important decisions”; “I think the hierarchy in my team is generally legitimate”. Answers were also given on a 7-point-Likert scale (1 = strongly disagree;

7 = “strongly agree”). Due to the low percentage of missing values, the mean was used to replace the missing scores. Cronbach´s alpha was 0.71 and aggregating statistics supported aggregating to the team level: ICC1 = .05; ICC2 = .15; mean rwg = .82.

Team performance. Due to the varying team backgrounds and differing tasks thereof, a broad

measure of team performance was used (adapted from Van der Vegt & Bunderson, 2005).

Hereby, the leader was asked to compare the team´s performance with that of a team with similar tasks and backgrounds by using assessment criteria, such as reaching team goals, meeting deadlines, work speed, quality of work, productivity as well as effectiveness. Response opportunities ranged from 1, meaning “far below average” to 7, meaning “far above average”.

Cronbach´s alpha was 0.85, suggesting that the leaders assessed the overall team effectiveness appropriately. The mean was 5.52 (s.d. = 0.79; N = 57).

Other controls. Since team size and team tenure are commonly associated with performance of

a team (Ancona & Caldwell, 1992; Katz, 1982), and also because team size might affect the

team´s ability to coordinate itself (Moreland, Levine, & Weingart, 1996), these two measures

were included as control variables. Moreover, since it might have mattered how much time the

team has been working together, I also controlled for working hours (see Table 1). Because of

the individually given answers of the employees, the answers were brought and analyzed on a group level.

RESULTS

Table 1 reports the descriptive statistics and correlations for all the study variables.

Legitimacy had a strong negative correlation with conflict (r = -.53, p < .01) and a strong positive correlation with coordination (r = .52, p < .01). This supports the assumptions, first, when legitimacy of a team´s hierarchy increases, conflict within a team decreases, and second, when legitimacy increases, coordination increases as well. Moreover, coordination and conflict had a strong negative correlation (r = -.66, p < .01), meaning when coordination decreases, conflicts within a team increase. Steepness and performance showed a positive correlation (r = .31, p < .05). This supports literature stating that steeper hierarchies may lead to an increase in performance. Nevertheless, neither steepness nor a team´s performance was significantly correlated to legitimacy (steepness: r = -.08, p = .56; performance: r = .20, p = .14). Moreover, neither steepness nor performance had a significant correlation to coordination (steepness: r = -.13, p = .35; performance: r = .07, p = .62) and conflict (steepness: r = .08, p = .58;

performance: r = -.01, p = .97).

The control variable working hours, included in the employee questionnaire, was found to be positively correlated to conflict (r = .31, p < .05) and to performance (r = .33, p < .05).

The control variable working hours for the leaders was negatively correlated to conflict (r = -

.31, p < .05) and positively correlated to performance (r = .32, p < .05). Hence, both control

variables were further included in the analysis. Since none of the other control variables had a

significant correlation to the dependent variables conflict, coordination, and performance, and

further did not affect the results significantly, I did not include them in running the analyses.

This is line with Becker´s recommendations (2005).

Table 2 shows the results of the regression analysis examining the main and/or

interaction effects of steepness, legitimacy, coordination, conflict as well as performance.

TABLE 1.

Descriptive statistics and correlations between the research variables

Variable Mean SD 1 2 3 4 5 6 7 8 9

1 Steepness

2 Legitimacy

3 Conflict

4 Coordination

5 Team Tenure Employee

6 Working Hours Employee

7 Performance

8 Team Tenure Leader

9 Working Hours Leader

10 Team Size

.43

5.04

3.09

4.82

3.25

3.38

5.52

5.05

3.72

5.04

.27

.54

.97

.91

2.89

.80

.79

5.00

.70

1.97

-.08

.08

-.13

-.11

.06

.31*

-.08

.12

-.09

-.53**

.52**

.06

-.17

.20

-.06

-.06

-.13

-.66**

-.02

.31*

-.01

.05

-.31*

-.10

.09

-.16

.07

-.01

-.11

.02

-.06

-.10

.46**

-.02

.01

.33*

-.04

.67**

-.21

.20

.32*

.00

.07

.06 -.33*

N= 56. ***p < .001; **p < .01; *p < .05. Team tenure in years.

TABLE 2.

Regression results: Coordination, conflict, and performance

Variables Model 1

DV: Coordination

Model 2 DV: Conflict

Model 3 DV: Performance

Model 4 DV: Performance Covariates:

Working Hours Employee Working Hours

Leader

-.02 (.15)

-.02 (.15)

.03 (.15)

.23 (.15)

.24 (.13)*

.09 (.13)

.24 (.13)

.08 (.14)

Independent Variable:

Steepness -.07 (.11) .01 (.11) .24 (.10)* .24 (.10)*

Moderator:

Legitimacy .48 (.11)*** -.51(.11)*** .23 (.10)*¹ .23 (.12)*²

Interaction:

Hierarchy Steepness x Legitimacy

-.10 (.09) .13 (.09)³ -.07 (.08) -.07 (.08)

Mediators:

Coordination Conflict

-- --

-- --

-- --

.02 (.13) .03 (.14)

Model F 4.31 6.27 3.09 2.69

R² .30 .39 .28 .28

N= 56. ***p < .001; **p < .01; *p < .05.

1 Running the analysis without the control variables, legitimacy was not found to be significant (p = n.s.)

2 Running the analysis without the control variables, legitimacy was not found to be significant (p = n.s.)

3 Running the analysis without the control variables, the interaction effect (hierarchy steepness x legitimacy) was found to be marginally significant (B = .16, p = .07).

Hypothesis 1 predicted the positive effect of informal hierarchy steepness on coordination within a team and hypothesis 2 stated that this positive relationship is moderated by perceived legitimacy (Model 1). No significance of steepness on coordination (B = -.07, p = .50) as well as no significance for the interaction effect were observed (B = -.10, p = .29).

Moreover, the control variables were both not found to be significant (working hours (employees): B = -.02, p = .90; working hours (leader): B = -.02, p = .89). However, I found a highly positively significant result for legitimacy (B = .48, p < .00). For that reason, hypothesis 1 and hypothesis 2 could not be approved, although legitimacy had a highly significant effect on coordination.

Model 2 was related to the third and fourth hypothesis predicting a positive relationship between informal hierarchy steepness and conflict within a team and that perceived legitimacy further moderates this positive relationship. Hierarchy steepness was not proven to have a significant effect on conflict (B = .01, p = .96). Also, the control variables were not significant (working hours (employees): B = .03, p = .86; working hours (leader): B = .23, p = .13). Even though no interaction was observed (B = .13, p = .17), legitimacy was shown to be highly negatively significant on conflict (B = -.51, p < .00). Concluding, neither the third nor the fourth hypothesis could be confirmed.

In the fifth hypothesis, it was predicted that the positive indirect effect of informal

hierarchy steepness on a team´s performance through coordination within a team is

strengthened when legitimacy is high, rather than low and under low legitimacy, the

strengthening effect is less strong. Hypothesis 6 proposed that the negative indirect effect of

informal hierarchy steepness on a team´s performance through conflict within a team is

strengthened when legitimacy is low, rather than high and is less strong when legitimacy is

high. First, I tested the simple moderation of legitimacy on the relationship between informal

hierarchy steepness and performance to see if the interaction directly affected this performance

(Model 3). However, this was not the case since the interacting effect of legitimacy was not shown to be significant (B = -.07, p = .42). Moreover, it was observed that steepness was positively related to performance (B = .24, p < .05) and the control variable working hours (employees) was also marginally positively significant (B = .24, p = .07). Working hours (leader) was not significant (B = .09, p = .49). Legitimacy was proven to have a positive effect on performance (B = .23, p < .05). Based on these findings, I derived the preliminary result that coordination and conflict did not implicate a mediating effect on the relationship between hierarchy steepness and performance. Indeed, model 4 showed that coordination and conflict did not serve as mediators in this relationship (coordination: B = .02, p = .87; conflict: B = .03, p = .83). The conditional indirect effect of hierarchy steepness on performance through conflict and through coordination, moderated by legitimacy was not observed to be significant. None of the confidence intervals did include a zero, which led to the rejection of the null hypothesis (Number of bootstrap samples for bias corrected bootstrap confidence intervals = 5000; level of confidence for all confidence intervals = 95.00; see Table 3). Additionally, the control variables were both not found to be significant (working hours (employees): B = .24, p = .08;

working hours (leader): B = .08, p = .55). It was observed that steepness was positively related

to performance (B = .24, p < .05), and so, the positive effect of hierarchy steepness on the

performance of a team could be demonstrated again. More than that, legitimacy was found to

be marginally positively significant (B = .23, p = .07). However, the interaction effect was not

found to be significant (B = .07, p = .43). Consequently, neither hypothesis 5 nor hypothesis 6

could be approved.

TABLE 3.

Bootstrap results, DV = Performance

Coordination and conflict as mediators

Legitimacy as a moderator

Conditional indirect effect Coordination Conflict

Boot LLCI Coordination Conflict

Boot ULCI Coordination Conflict Low

Average High

.00 (.03) -.00 (.02) -.00 (.04)

-.00 (.03) .00 (.02)

.0 (.03)

-.06 -.07 -.10

-.08 -.03 -.04

.06 .03 .06

.04 .04 .11

N = 5.000. Bias corrected bootstrap confidence intervals 95.00.

Changing the bootstrap sample (N = 1000; N = 10000) and including the control variables in the analysis did not result in different outcomes.

DISCUSSION

Whereas findings from a number of studies argued for a positive indirect effect of hierarchy steepness on performance through coordination (e.g. Halevy et al., 2011; Anicich et al., 2012), others reported a negative indirect effect through arisen conflicts (e.g. Bendersky &

Hays, 2012). In order to make sense of these equivocal findings, I suggested to include perceived legitimacy as a moderator for the indirect relationship between hierarchy steepness and performance through conflict and coordination within teams. I assumed that the positive indirect relationship of hierarchy steepness on a team´s performance through coordination is strengthened when legitimacy is high and less strengthening when legitimacy is low. Moreover, I hypothesized that the negative indirect relationship of hierarchy steepness on performance through conflict is strengthened when legitimacy is low, and respectively, is less strengthening when legitimacy is high. Although the results did not support my hypotheses, it is still possible to draw new meaningful insights for future research.

Theoretical implications

Since perceived legitimacy showed strong main effects on the potential for conflicts and

for the coordination within teams, it can be concluded that perceived legitimacy serves an

antecedent for these team processes. Although legitimacy was not significantly found to serve

as moderator in the relationship between hierarchy steepness and coordination, the results show

that legitimacy has a strong positive effect on coordination. Interestingly, perceived legitimacy

is even more important for coordination than hierarchy strength, which was not proven to be

significant. Hence, perceived legitimacy of the individual rank may provide an explanation why

coordination is more or less efficient in teams. Moreover, legitimacy had a highly negatively

significant effect on conflicts within a team. When perceived illegitimacy increase, the potential

for conflicts increase as well. This result further strengthens the argumentation of Greer and

Bendersky (2013) and of Bendersky and Hays (2012) which emphasize that assigned ranks,

perceived as unfair, may lead to more conflicts. Regarding these findings, I suggest that perceived legitimacy, or rather illegitimacy, should be seen as an antecedent for conflicts within a group. Introducing legitimacy as an important influence factor, this might explain why conflicts are more likely to occur in certain teams and that steepness itself might not cause the arisen conflicts. These findings provide us with initial empirical evidence that legitimacy plays an important role for a better understanding of team processes and further why some teams might work more efficient than others. The approach of seeing legitimacy as an important influence factor for coordination and conflict, is a first step to find an explanation for the observation that in some teams, the potential for conflicts is higher and/or coordination is more efficient. However, further research is needed.

In addition, I found a positive correlation and a positive significance for the relationship of hierarchy steepness and a team´s performance. As aforementioned, in theory and research, there are equivocal findings whether steepness leads to higher or lower performance (Anderson

& Brown, 2010). Although the proposed mediating mechanisms of coordination and conflict

are not statistically proven in my study, I found fundamental support that informal hierarchy

steepness is beneficial for achieving higher performance. Additionally, my findings reveal a

positively significant effect of legitimacy on performance showing that high perceived

legitimacy has a positive impact on performance. Again, legitimacy serves as an important

antecedent for the dependent variable, in this case, performance. It seems, that both variables

serve as important influence factors to ensure high-performing teams in a work context. My

findings shed new light on explaining under which circumstances hierarchy steepness leads to

higher performance. Nevertheless, more research is needed to truly understand the influences

of hierarchy steepness and legitimacy leading to a higher level of performance at team level.

For conducting future research, it is important to reflect why my proposed reasoning was not found to be confirmed.

First, I hypothesized that legitimacy has a moderating effect on the relationship between hierarchy steepness and conflict. However, my results did not show neither a direct effect of hierarchy steepness on conflicts nor a significant interaction effect. One plausible explanation might be that the mean of conflict was 3.09 (s.d. = .97) and the range of answers was between 1.11 and 5.11. Conflict was measured with a 7-point Likert scale. Since a higher score meant higher conflict potential within a team, it can be concluded that the conflict potential was rather low. Hence, it might be the case that the moderating effect of legitimacy would have been prevalent if the sample would have included teams with more extreme conflict potential.

Although it is well documented in research that steepness has a negative indirect effect on performance through conflict, I could not find support for the mediating role of conflict. In my study, three types of conflicts were measured, however I did not distinguish between them and integrated all scores into one “conflict” variable. By doing so, this approach might fail to fully illustrate the conflict potential, and hence, it might not have shown the expected results. Since past research showed that process conflict was most consistently found to be related to a team´s performance (Matsuo, 2006; Greer, Jehn, & Mannix, 2008; Jehn, Greer, Levine, & Szulanski, 2008; Behfar et al., 2011), it would be interesting in future research to separate various forms of conflicts and further investigate if there are different outcomes for various forms of conflicts.

Second, no significant results were found for the moderating effect of legitimacy on the indirect relationship of hierarchy steepness and performance through coordination within a team. A reason for this might be that steepness was measured based on influence ratings of the employees rather than formal rankings. Although the members indicated from whom they are influenced, the background information on how the hierarchy was initially developed is lacking.

In past studies, which found effects for informal steep hierarchies on coordination, the team

developed the informal hierarchy itself (e.g. He & Huang, 2011). In other studies, which argued for the mediating role of coordination, hierarchy was often based on clearly formal assigned ranks (e.g. Halevy et al., 2012). In my sample, it could have been the case that the team members have been officially formal ranked and when they indicated the influence ratings, the members basically indicated the formal rankings. This might be one reason, why I did not find any support for the relationship between informal hierarchy steepness, coordination, and performance, and further, why I also did not find results for the moderating effect of legitimacy.

Practical implications

My study shows that perceived legitimacy has strong effects on group processes, such that high legitimacy increases coordination and decreases conflicts within teams. These findings offer a new explanation for the (in-)effectiveness of team processes, and so, might answer the question why some groups suffer more from conflicts than others do and further why some teams better coordinate themselves. Practically, this newly gained insight is of high importance for managers who strive to achieve a more efficient coordination within his/her team and/or want to achieve that conflicts arise less frequently. When a team suffers from conflicts and coordination efforts are rather inefficient, a manger can take corrective actions by directly asking the team members whether they perceive their assigned ranks as fair and if not, where they see potential for improvements in the future. In my opinion, this might prevent members from challenging their position, and consequently, may decrease the potential for conflicts. Additionally, I suggest that by ensuring the steep hierarchy to be perceived as legitimate, the hierarchy may be stabilized and more efficient coordination occurs. Hence, the promotion of open communication might help to bridge discrepancies within teams, and consequently, foster the overall efficiency of teamwork.

Moreover, managers should be aware of to what extent employees perceive the informal

steep hierarchy as legitimate since this may affect their behavior. Both, hierarchy steepness and

perceived legitimacy, are shown to have significant positive effects on a team´s performance.

When performance decreases, necessary steps need to be taken. In this regard, the manager is advised to evaluate why a team shows low performance by directly questioning members´

perceived legitimacy of the steep hierarchy and how this might affect their specific behaviors.

Therefore, in regularly undertaken performance appraisals, a manager is advised to pay attention to the important influential factor of perceived legitimacy on performance within the context of steep informal hierarchies.

General limitations and future research

Besides the limitations and possibilities for future research which are already mentioned in the theoretical implications, additional general limitations and possibilities for further research are to be noted.

First, it should be recognized that the study variables were all measured at the same time. It could be the case that I would have found different results, and so, would have drawn different conclusions, when the data collection would have been done at different points of time. For instance, the potential for conflicts may change over time dependent on differing situational and environmental influence factors. Here, it might be the case that high perceived legitimacy and its conflict-reducing potential is more important in dynamic environments in which the organization is faced with ever changing conditions. Hence, more empirical research is needed.

Since other influence factors are still possible, it would have been interesting to consider a

broader range of mediating or moderating variables. For instance, it is imaginable that perceived

legitimacy strengthens the effect of social identification on coordination. Indeed, social

identification helps lower-ranked members to identify themselves with their ranks and the

resulting role, which in turn, facilitates cooperation (Ellemers, Wilke, & van Knippenberg,

1993; Tyler & Blader, 2000) and coordination within steep hierarchies. More empirical findings are needed.

So far, relatively little is known about perceived legitimacy and its underlying effects on team processes and team outcomes and perceived legitimacy provides important possibilities for future research. In general, I have only scratched the surface in the understanding of the mechanisms that underlie the effects of perceived legitimacy and future research is needed.

Conclusion

Although I have not found significant results for the moderating effect of legitimacy, and so, my proposed model was not supported, I have found significant results in an organizational environment that considering perceived legitimacy as an antecedent for coordination and conflicts as well as on performance plays an important functional role within group processes. The results of my study provide initial conceptual and empirical insights for researchers to sort out under which circumstances, a team more efficiently coordinates itself and under which circumstances the potential for conflicts in some teams is higher than in others.

Furthermore, I find support for the beneficial functioning of hierarchy steepness and perceived

legitimacy on performance. Notwithstanding, more research is needed to gain a deeper

understanding of the dynamics of perceived legitimacy. This study should be a starting point

for future studies.

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