A problem with very hierarchical organizations is that people at lower levels can't take important decisions, but have to pass on responsibility to their boss. However, the modern tendency is to reduce the chain of command, take out layers of management, and make the organization much flatter.
Advanced IT systems have reduced the need for administrative staff and enabled companies to remove layers of workers from the structure. Many companies have also been forced to cut back and eliminate jobs in recessions.
Typically, the owners of small firms want to keep as much control over their business as possible, whereas managers in larger businesses who want to motivate their staff often delegate decision making and responsibilities to other people.