This is a more problem than networks vs hierarchies since both face this problem. All companies that succeed by definition start with a successful social structure, but as a companies increases the number of employees the social structure has trouble scaling. Clausewitz discusses a simple example of this with an army, as the army grows the number of links in the chain from a commander to a unit increases. He proposes a number of solutions (increase the unit size, increase the branching degree, split the army, etc) but in typical Clausewitzian fashion admits there is an inherent trade off between size and effectiveness.
Valve maybe choosing to stay small to avoid scaling beyond their effective structure. This is a counter-intuitive strategy in the world of bigger is better, but I'm interested in seeing how it plays out.