adding management layers is just one way to solve the coordination problem caused by scaling (which you do because you think the business can become more profit

adding management layers is just one way to solve the coordination problem caused by scaling (which you do because you think the business can become more profitable). you can also scale a business horizontally rather than vertically, but that doesn't have the property of shielding executives from their decisions, nor of centrally controlling information (which allows them to capture more of the value produced by the firm). vertical scaling is preferred by managers for these properties, not because it's how you must scale.