M-form hierarchy with poorly-diversified divisions: A case of Khrushchev's reform in Soviet Russia

► We study effectiveness of poorly-diversified M-form hierarchies to generate growth. ► We use Soviet Sovnarkhoz reform as an example of poorly-diversified M-form. ► The reform created yardstick competition for regional leaders. ► Effectiveness of the competition depended on diversification of regional economy. ► The competition produced higher growth only in diversified, self-contained regions.