“Hierarchical Escalation” and Opportunistic Behavior: The Behavioral Logic of Hierarchical Organizations in Escalating Demands at Each Level

“Hierarchical escalation” is a recurrent organizational phenomenon in policy implementation by Chinese bureaucratic organizations. On the one hand, this phenomenon strongly drives local development; on the other hand, it often exceeds reasonable limits, attracting public attention as well as dissatisfaction. Based on the concept of “hierarchical escalation”, there are many differences between different organizational behavior and organizational consequences. Decisions related to “hierarchical escalation” encompass both the “escalation” of policy goals and the “escalation” of policy instruments, with the grassroots implementers responding differently to various “hierarchical escalation” tasks. However, existing research has not effectively clarified the distinctions and relationships between the organizational process of “hierarchical escalation” decision-making and the organizational consequences of opportunistic behavior by grassroots implementers. Our research questions are: Under what circumstances does “hierarchical escalation” occur? How are different “hierarchical escalation” decisions linked to opportunistic implementation behavior?

Adopting an integrative perspective, this paper proposes a typological explanation for “escalation” and “reception”. First, based on a three-level “principal-manager-agent” framework, we propose that the manager represents the intermediate government, which is the decision-maker in terms of “hierarchical escalation”, while the agent represents the grassroots government, which is the perpetrator of opportunism. Our analysis suggests that strong incentives and high-risk tasks are the necessary conditions that trigger “hierarchical escalation”. The combination of positive or negative incentive structures and the two types of task risks, namely the implementation risks and the acceptance risks, jointly shape the forms of escalation by managers and moderate the reception behavior by agents. Incentive distortions and the amplification of risks positively moderate an agent's opportunistic tendencies, producing opportunistic behavior, such as inflated performance, over-execution, performative governance, and the hiding of information. Furthermore, through information and authority mechanisms a principal's inspection and acceptance methods adjust the strategic choices under specific incentives and risks.

Our research contribution lies in categorizing and discussing the phenomenon of “hierarchical escalation” from an integrative perspective, enriching the dialogue between Chinese phenomena and classic theories and enhancing our understanding of the complex patterns in Chinese government policy implementation. Additionally, clarification of the inherent differences among the different types of “hierarchical escalation” is helpful in the formulation of targeted corrective policies.