Hostname: page-component-54dcc4c588-xh45t Total loading time: 0 Render date: 2025-10-03T14:51:19.337Z Has data issue: false hasContentIssue false
  • English
  • Français

The relative importance of CEOS and non-CEOS over firm performance

Published online by Cambridge University Press:  05 July 2019

Alex Bolinger ,
Jeff Brookman Open the ORCID record for Jeff Brookman [Opens in a new window]  and
Paul Thistle
Alex Bolinger
Affiliation:
College of Business, Idaho State University, 921 S. 8th Ave, Pocatello, ID 83209, USA
Jeff Brookman*
Affiliation:
College of Business, Idaho State University, 921 S. 8th Ave, Pocatello, ID 83209, USA
Paul Thistle
Affiliation:
College of Business, University of Nevada, Las Vegas, 4505 Maryland Parkway, Box 456008, Las Vegas, NV 89154-6008, USA
*
*Corresponding author. Email: broojeff@isu.edu
Get access Rights & Permissions [Opens in a new window]

Abstract

The purpose of this study is to examine the relative contributions of the CEO and other (non-CEO) top management team members to firm performance. Using data from ExecuComp, we analyze 2,687 CEOs and 11,501 other top management team (TMT) members, by industry, during the period 2004–2017 using variance decomposition methods. We find that other TMT member effects are important but are smaller than CEO effects. We also find that the effect of new TMT members appointed by the CEO on firm performance is larger than the effect of continuing TMT members and that this differential effect on performance increases with CEO tenure.

Keywords

upper echelons theorymanagerial power theoryTMT turnover

Information

Type
Research Article
Information
Journal of Management & Organization , Volume 29 , Issue 1 , January 2023 , pp. 1 - 13
Copyright
Copyright © Cambridge University Press and Australian and New Zealand Academy of Management 2019

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Article purchase

Temporarily unavailable

References

Amason, A. (1996). Distinguishing the effects of functional and dysfunctional conflict on strategic decision-making: Resolving a paradox for top management teams. Academy of Management Journal, 39, 123–148.CrossRefGoogle Scholar
Amason, A., & Mooney, A. (1999). The effects of past performance on top management team conflict in strategic decision making. International Journal of Conflict Management, 10, 340–359.CrossRefGoogle Scholar
Barrick, M., Bradley, B., Kristof-Brown, A., & Colbert, A. (2007). The moderating role of top management team interdependence: Implications for real team and working groups. Academy of Management Journal, 50, 544–557.CrossRefGoogle Scholar
Barron, J., Chulkov, D., & Waddell, G. (2011). Top management team turnover, CEO succession type and strategic change. Journal of Business Research, 64, 904–910.CrossRefGoogle Scholar
Barsade, S., Ward, A., Turner, J., & Sonnenfeld, J. (2000). To your heart's content: A model of affective diversity in top management teams. Administrative Science Quarterly, 45, 802–836.CrossRefGoogle Scholar
Bertrand, M., & Schoar, A. (2003). Managing with style: The effect of managers on firm policies. Quarterly Journal of Economics, 118, 1169–1208.CrossRefGoogle Scholar
Cannella, A., Park, J.-H., & Lee, H.-U. (2008). Top management team functional background diversity and firm performance: Examining the roles of team member colocation and environmental uncertainty. Academy of Management Journal, 51, 768–784.Google Scholar
Carpenter, M., Sanders, W., & Gregersen, H. (2001). Bundling human capital with organizational context: The impact of international assignment experience on multinational firm performance and CEO pay. Academy of Management Journal, 44, 493–512.CrossRefGoogle Scholar
Carpenter, M., Pollock, T., & Leary, M. (2003). Testing a model of reasoned risk taking: Governance, the experience of principals and agents, and global strategic intent. Strategic Management Journal, 24, 803–820.CrossRefGoogle Scholar
Carpenter, M. A. (2002). The implications of strategy and social context for the relationship between top management team heterogeneity and firm performance. Strategic Management Journal, 23, 275–284.CrossRefGoogle Scholar
Carpenter, M. A., Geletkanycz, M. A., & Sanders, W. G. (2004). Upper echelons theory revisited: Antecedents, elements, and consequences of top management team composition. Journal of Management, 30, 749–778.CrossRefGoogle Scholar
Collins, C. J., & Clark, K. D. (2003). Strategic human resource practices, top management team social networks, and firm performance: The role of human resource practices in creating organizational competitive advantage. Academy of Management Journal, 46, 740–751.CrossRefGoogle Scholar
Dean, J. W., & Sharfman, M. P. (1996). Does decision process matter? A study of strategic decision-making effectiveness. Academy of Management Journal, 39, 368–392.CrossRefGoogle Scholar
Domingues-CC, M., & Barroso-Castro, C. (2017). Managerial change and strategic change: The temporal sequence. Journal of Management and Organization, 23, 46–73.CrossRefGoogle Scholar
Finkelstein, S. (1992). Power in top management teams: Dimensions, measurement and validation. Academy of Management Journal, 35, 505–538.CrossRefGoogle ScholarPubMed
Finkelstein, S., & Hambrick, D. (1990). Top-management-team tenure and organizational outcomes: The moderating role of managerial discretion. Administrative Science Quarterly, 35, 484–503.CrossRefGoogle Scholar
Fitza, M. (2014). The use of variance decomposition in the investigation of CEO effects: How large must the CEO effect be to rule out chance? Strategic Management Journal, 35, 1839–1852.CrossRefGoogle Scholar
Haleblian, J., & Finkelstein, S. (1993). Top management team size, CEO dominance, and firm performance: The moderating roles of environmental turbulence and discretion. Academy of Management Journal, 36, 844–863.CrossRefGoogle Scholar
Hambrick, D. C. (2007). Upper echelons theory: An update. Academy of Management Review, 32, 334–343.CrossRefGoogle Scholar
Hambrick, D., & Fukutomi, G. (1991). The seasons of a CEO's tenure. Academy of Management Review, 16, 719–742.CrossRefGoogle ScholarPubMed
Hambrick, D., Humphrey, S., & Gupta, A. (2015). Structural interdependence within top management teams: A key moderator of upper echelon predictions. Strategic Management Journal, 36, 449–461.CrossRefGoogle Scholar
Hambrick, D. C., & Mason, P. A. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9, 193–206.CrossRefGoogle Scholar
Hambrick, D. C., & Quigley, T. J. (2013). Toward more accurate contextualization of the CEO effect on firm performance. Strategic Management Journal, 35, 473–491.CrossRefGoogle Scholar
Hannan, M. T., & Freeman, J. (1984). Structural inertia and organizational change. American Sociological Review, 49, 149–164.CrossRefGoogle Scholar
Henderson, A. D., & Fredrickson, J. W. (2001). Top management team coordination needs and the CEO pay gap: A competitive test of economic and behavioral views. Academy of Management Journal, 44, 96–117.CrossRefGoogle Scholar
Henderson, A. D., Miller, D., & Hambrick, D. C. (2006). How quickly do CEOs become obsolete? Industry dynamism, CEO tenure, and company performance. Strategic Management Journal, 27, 447–460.CrossRefGoogle Scholar
Iaquinto, A., & Fredrickson, J. (1997). Top management team agreement about the strategic decision process. Strategic Management Journal, 18, 63–75.3.0.CO;2-N>CrossRefGoogle Scholar
Isaacson, W. (2011). Steve Jobs: The exclusive biography. New York: Simon and Schuster.Google Scholar
Jackson, S. E., Schuler, R. S., & Jiang, K. (2014). An aspirational framework for strategic human resource management. The Academy of Management Annals, 8, 1–56.CrossRefGoogle Scholar
Keck, S. L. (1997). Top management team structure: Differential effects by environmental context. Organization Science, 8, 143–156.CrossRefGoogle Scholar
Kesner, I., & Dalton, D. (1994). Top management team turnover and CEO succession: An investigation of the effects of turnover on performance. Journal of Management Studies, 31, 701–713.CrossRefGoogle Scholar
Lieberson, S., & O'Connor, J. F. (1972). Leadership and organizational performance: A study of large corporations. American Sociological Review, 37, 117–130.CrossRefGoogle ScholarPubMed
Ling, Y., Simsek, Z., Lubatkin, M. H., & Veiga, J. F. (2008). Transformational leadership's role in promoting corporate entrepreneurship: Examining the CEO-TMT interface. Academy of Management Journal, 51, 557–576.CrossRefGoogle Scholar
Mackey, A. (2008). The effect of CEOs on firm performance. Strategic Management Journal, 29, 1357–1367.CrossRefGoogle Scholar
Patel, P. C., & Cooper, D. (2014). Structural power equality between family and non-family TMT members and the performance of family firms. Academy of Management Journal, 57, 1624–1649.CrossRefGoogle Scholar
Peterson, R. S., Smith, D. B., Martorana, P. V., & Owens, P. D. (2003). The impact of chief executive officer personality on top management team dynamics: One mechanism by which leadership affects organizational performance. Journal of Applied Psychology, 88, 795–808.CrossRefGoogle Scholar
Quigley, T. J., & Hambrick, D. C. (2014). Has the “CEO effect” increased in recent decades? A new explanation for the great rise in America's attention to corporate leaders. Strategic Management Journal, 36, 821–830.CrossRefGoogle Scholar
Quigley, T., & Graffin, S. (2017). Reaffirming the CEO effect is significant and much larger than chance: A comment on Fitza (2014). Strategic Management Journal, 38, 793–801.CrossRefGoogle Scholar
Ridge, J., Aime, F., & White, M. A. (2015). When much more of a difference makes a difference: Social comparison and tournaments in the CEO's top team. Strategic Management Journal, 36, 618–636.CrossRefGoogle Scholar
Ridge, J., Hill, A., & Aime, F. (2017). Implications of multiple concurrent pay comparisons to top-team turnover. Journal of Management, 43, 671–690.CrossRefGoogle Scholar
Siggelkow, N. (2002). Evolution toward fit. Administrative Science Quarterly, 47, 125–159.CrossRefGoogle Scholar
Sinha, P. N., Inkson, K., & Barker, J. R. (2012). Committed to a failing strategy: Celebrity CEO, intermediaries, media and stakeholders in a co-created drama. Organization Studies, 33, 223–245.CrossRefGoogle Scholar
Smith, A., Houghton, S. M., Hood, J. N., & Ryman, J. A. (2006). Power relationships among top managers: Does top management team power distribution matter for organizational performance? Journal of Business Research, 59, 622–629.CrossRefGoogle Scholar
Smith, K., Smith, K., Olian, J., Sims, H., O'Bannon, D., & Scully, J. (1994). Top management team demography and process: The role of social integration and communication. Administrative Science Quarterly, 39, 412–438.CrossRefGoogle Scholar
Tien, T., Chen, C.-N., & Chuang, C.-M. (2013). A study of CEO power, pay structure and firm performance. Journal of Management and Organization, 19, 424–453.CrossRefGoogle Scholar
Walters, B., Kroll, M., & Wright, P. (2010). The impact of TMT board member control and environment on post-IPO performance. Academy of Management Journal, 53, 572–595.CrossRefGoogle Scholar
Wiersema, M., & Bantel, K. (1992). Top management team demography and corporate strategic change. Academy of Management Journal, 35, 91–121.CrossRefGoogle Scholar