Editing Hierarchical organization (section)

====Hierarchy as ladder of formal authority====
This type of hierarchy is defined as a sequence of levels of formal [[authority]], that is, the authority to [[Decision-making|make decisions]].<ref name="Romme"/><ref>Tirole, J. (1986), “Hierarchies and bureaucracies: On the role of collusion in organizations.” ''Journal of Law, Economics, &amp; Organization'', 2: 181–214. https://doi.org/10.1093/oxfordjournals.jleo.a036907</ref><ref>{{Cite journal |last=Adler |first=Paul S. |date= 2001|title=Market, Hierarchy, and Trust: The Knowledge Economy and the Future of Capitalism |url=https://pubsonline.informs.org/doi/10.1287/orsc.12.2.215.10117 |journal=Organization Science |language=en |volume=12 |issue=2 |pages=215–234 |doi=10.1287/orsc.12.2.215.10117 |issn=1047-7039}}</ref><ref name=":0" /> This results in a ladder that systematically differentiates the authority to make decisions. A typical authority-based hierarchy in [[Company|companies]] is: the [[board of directors]], [[Chief executive officer|CEO]], departmental [[Management|managers]], [[team leader]]s, and other [[Employment|employees]].<ref name="Romme" /> The authority-based hierarchy, also known as the formal hierarchy, to a large extent arises from the legal structure of the organization: for example, the owner of the firm is also the CEO or appoints the CEO, who in turn appoints and supervises departmental managers, and so forth.<ref name="Romme" />