The phenomenon of the "Corridor of Dwarfism" represents a hidden and erosive mechanism within bureaucratic organizations, signifying a vicious cycle in which incompetent managers systematically reproduce less-competent managers and disempowered employees. This cycle is perpetuated through the application of management tools and practices that are fundamentally misaligned with human dignity, effectively blocking meritocracy and cementing institutional incapacity. This qualitative study, utilizing the Grounded Theory method based on the Strauss and Corbin approach, investigates the formation, perpetuation, and reproduction mechanisms of this phenomenon in bureaucratic organizations. Data were collected through semi-structured interviews with 12 experts and analyzed via open, axial, and selective coding. The results led to the identification of five main categories: causal conditions, contextual conditions, intervening conditions, strategies, and consequences. Within this framework, the "Corridor of Dwarfism" emerges as the core phenomenon, interacting with the structural and cultural conditions of the organization to form a self-reinforcing cycle. The findings indicate that the dominance of a deferential/subservient culture, excessive politicalization of administration, lack of transparency in career advancement paths, and the absence of effective performance evaluation systems provide a fertile ground for the emergence and proliferation of this phenomenon. Reforming the performance evaluation structure and fostering a culture of transparency and meritocracy are proposed as key solutions to counteract it.