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As organizations strive for more flexibility, decentralized decision‐making has been at the core of many modern HR approaches. Yet, on a company‐wide scale, it remains unclear whether decentralized decision‐making structures improve organizational performance. Our study aims to illuminate prior ambiguous evidence by examining an employee‐level mechanism underlying the organizational‐level relationship between decentralization and performance, and scrutinizing the critical role of formal leaders for empowering employees in decentralized structures. Integrating the perspective of organizational structure as opportunities and constraints with social information processing theory, we argue that transferring decision‐making authority to lower organizational levels positively affects employees' emergent leadership, but only to the extent that direct supervisors engage in empowering leadership and guide employees' behaviors in decentralized structures. Our predictions are supported by a multilevel, multisource field study of 5807 individuals across 144 companies. We further find that emergent leadership yields a positive effect on organizational performance. By developing a multilevel model that explicates both an employee‐level mechanism and a contingency of the decentralization–organizational performance link, our study enriches understanding of the key role that formal leaders play for achieving the strategic goals of decentralized decision‐making in organizations. [ABSTRACT FROM AUTHOR]

Summary: Traditionally, older employees have held higher positions in the organizational hierarchy. However, today, there is significant variation among firms in the extent to which age is correlated with rank. In this study, we integrate the career timetable and social exchange theory to propose that age–rank correlation is related to organizational performance, serially mediated by the perceived age discrimination climate and organizational innovation. We further suggest that the direction of this indirect relationship depends on firms' environmental dynamism. We find support for our moderated serial mediation framework using multisource data from 12,829 employees, 68 top HR representatives, and 229 top managers in 68 firms. Under lower levels of environmental dynamism, age–rank correlation was negatively related to perceived age discrimination climate and had a positive indirect relationship with organizational performance. Under higher levels of environmental dynamism, age–rank correlation was positively related to perceived age discrimination climate and had a negative indirect relationship with organizational performance. Our study provides a more nuanced view of the fading link between age and rank, which has typically been viewed negatively and from an individual perspective only. Additionally, our results have important practical implications for organizations navigating a shifting workforce demographic in increasingly dynamic environments. [ABSTRACT FROM AUTHOR]