A key challenge for hierarchical organizations is that people in lower layers may not contribute to exploration. In the literature, scholars have pinpointed incentive problems in a hierarchy that prevent subordinates from engaging with uncertain opportunities. In this study, I propose an alternative mechanism that might operate in addition to the incentive-based explanation. Specifically, I argue that in situations involving learning-by-doing, sequential decision-making embedded in hierarchical structures endogenously curtails subordinates’ exploration and makes them conform to their bosses, precisely because their exploratory proposals may not produce information to learn if subsequent decision-makers (their bosses) do not implement. I demonstrate that this alternative mechanism can operate independently of the incentive problems and also require distinct solutions: managers should collect and provide counterfactual information about unimplemented proposals to their subordinates. I draw implications for organizational decision-making, learning, and organization design.
