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"HAMBRICK, DONALD C."
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Toward more accurate contextualization of the CEO effect on firm performance
We introduce multiple refinements to the standard method for assessing CEO effects on performance, variance partitioning methodology, more accurately contextualizing CEOs' contributions. Based on a large 20-year sample, our new 'CEO in Context' technique points to a much larger aggregate CEO effect than is obtained from typical approaches. As a validation test, we show that our technique yields estimates of CEO effects more in line with what would be expected from accepted theory about CEO influence on performance. We do this by examining the CEO effects in subsamples of low-, medium-, and high-discretion industries. Finally, we show that our technique generates substantially different—and we argue more logical—estimates of the effects of many individual CEOs than are obtained through customary analyses.
Journal Article
Structural interdependence within top management teams: A key moderator of upper echelons predictions
Studies of the effects of top management team (TMT) composition on organizational outcomes have yielded mixed and confusing results. A possible breakthrough resides in the reality that TMTs vary in how they are fundamentally structured. Some are structured such that members operate independently of each other, while others are set up such that roles are highly interdependent. We examine the potential for three facets of structural interdependence—horizontal, vertical, and reward interdependence—to resolve ambiguities regarding effects of TMT heterogeneity. Based on a sample of TMTs in technology firms, we find that the three facets of structural interdependence are potent moderators of two classic predictions: the positive association between TMT heterogeneity and member departures, and between TMT heterogeneity and firm performance.
Journal Article
When the former ceo stays on as board chair: effects on successor discretion, strategic change, and performance
Prior research on CEO succession has omitted consideration of a critical institutional reality: some exiting CEOs do not fully depart the scene but instead remain as board chairs. We posit that predecessor retention restricts a successor's discretion, thus dampening his or her ability to make strategic changes or deliver performance that deviates from pre-succession levels. In short, a predecessor's continuing presence suppresses a new CEO's influence. Based on analysis of 181 successions in high technology firms, and with extensive controls (for circumstances associated with succession, the firm's need and capacity for change, and for endogeneity), we find substantial support for our hypotheses. In supplementary analyses, we find that retention has a more pronounced effect in preventing a new CEO from making big performance gains than in preventing big drops.
Journal Article
Attention as the Mediator Between Top Management Team Characteristics and Strategic Change: The Case of Airline Deregulation
We integrate the upper-echelons perspective with the attention-based view of the firm by examining the role of attentional orientation of top management teams (TMTs). In the context of airline deregulation, we find that deregulation caused a shift in managerial attention, but that this shift in attention was the greatest for firms that changed the composition and compensation of their TMTs in ways that favored the deregulated regime. We also find that attention partially mediated the relationship between TMT changes and strategy changes. The results of this study shed light on the transformation of industry attention patterns following an environmental shift, and the role of TMT composition and incentive systems in that process.
Journal Article
Acquisition Integration and Productivity Losses in the Technical Core: Disruption of Inventors in Acquired Companies
Acquisition integration is a pivotal factor in determining whether the objectives of an acquisition are achieved. In this paper, we hypothesize that the productivity of corporate scientists of acquired companies is generally impaired by integration, but that some scientists experience more disruption than others. In particular, acquisition integration will be most disruptive, leading to the most severe productivity drops, for those inventors who have lost the most social status and centrality in the combined entity. Drawing from prior literatures on the knowledge-based view of the firm, and on mergers and acquisitions, we develop hypotheses about a concise set of conditions that will lead to substantial performance drops for acquired technical personnel. We test our hypotheses, using patent application data, on a sample of 3,933 inventors in pharmaceutical firms whose companies were acquired. Results are strongly in line with our theorized expectations.
Journal Article
Has the \CEO effect\ increased in recent decades? A new explanation for the great rise in America's attention to corporate leaders
We introduce a new explanation for one of the most pronounced phenomena on the American business landscape in recent decades: a dramatic increase in attributions of CEO significance. Specifically, we test the possibility that America's CEOs became seen as increasingly significant because they were, in fact, increasingly significant. Employing variance partitioning methodologies on data spanning 60years and more than 18,000 firm-years, we find that the proportion of variance in performance explained by individual CEOs, or \"the CEO effect,\" increased substantially over the decades of study. We discuss the theoretical and practical implications of this finding.
Journal Article
New directions in corporate governance research
In this essay, we seek to identify the contributions that strategy and organizational researchers have made, and continue to make, in enhancing our understanding of a wide variety of important corporate governance questions. We begin by discussing how these research contributions stem from a willingness to draw from and contribute to different streams of intellectual thought, and we provide an orienting framework to situate this work.
Journal Article
RED, BLUE, AND PURPLE FIRMS: ORGANIZATIONAL POLITICAL IDEOLOGY AND CORPORATE SOCIAL RESPONSIBILITY
Research summary: Why do firms vary so much in their stances toward corporate social responsibility (CSR)? Prior research has emphasized the role of external pressures, as well as CEO preferences, while little attention has been paid to the possibility that CSR may also stem from prevailing beliefs among the body politic of the firm. We introduce the concept of organizational political ideology to explain how political beliefs of organizational members shape corporate advances in CSR. Using a novel measure based on the political contributions by employees of Fortune 500 firms, we find that ideology predicts advances in CSR. This effect appears stronger when CSR is rare in the firm's industry, when firms are high in human capital intensity, and when the CEO has had long organizational tenure. Managerial summary: Why do firms vary in their stances toward corporate social responsibility (CSR)? Prior research suggests that companies engage in CSR when under pressure to do so, or when their CEOs have liberal values. We introduce the concept of organizational political ideology, and argue that CSR may also result from the values of the larger employee population. Introducing a novel measure of organizational political ideology, based on employees' donations to the two major political parties in the United States, we find that liberal-leaning companies engage in more CSR than conservative-leaning companies, and even more so when other firms in the industry have weaker CSR records, when the company relies heavily on human resources and when the company's CEO has a long organizational tenure.
Journal Article
Differences in managerial discretion across countries: how nation-level institutions affect the degree to which ceos matter
The concept of managerial discretion provides a theoretical fulcrum for resolving the debate about whether chief executive officers (CEOs) have much influence over company outcomes. In this paper, we operationalize and further develop the construct of managerial discretion at the national level. In an empirical examination of 15 countries, we find that certain informal and formal national institutions—individualism, tolerance of uncertainty, cultural looseness, dispersed firm ownership, a common-law legal origin, and employer flexibility—are associated with the degree of managerial discretion available to CEOs of public firms in a country. In turn, we show that country-level managerial discretion is associated with how much impact CEOs have on the performance of their firms. We also find that discretion mediates the relationship between national institutions and CEO effects on firm performance. Finally, we discuss two inductively derived institutional themes: autonomy orientation and risk orientation.
Journal Article