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Assessing managerial discretion across industries: A multimethod approach
... With a view to improving the validity and reliability of the measures of managerial discretion across industries, Hambrick and Abrahamson (1995) tested for certain distinguishing objective characteristics. ...
... They did this, in a study of the US market, by focusing strictly on the external or task environmentspecifically an industry, noted as the broadest and arguably the most fundamental source of discretion (Hambrick and Finkelstein, 1987). Based on the measurement of several objective industry characteristics, Hambrick and Abrahamson (1995) found that companies can be categorized as either belonging to a high discretion industry or a low discretion industry. For organizations in a high discretion industry, the locus of control is internalized and at the discretion of the top management. ...
... In subsequent studies, scholars have adopted the empirically validated objective industry characteristics for measuring industry discretion as established by Hambrick and Abrahamson (1995), to evaluate attentional homogeneity in industries (Abrahamson and Hambrick, 1997); the commitment of Chief Executive Officers (CEOs) to the status quo (McClelland et al., 2010); and an empirical review of managerial discretion and focus on future research directions (Wangrow et al., 2015). Despite the number of studies that have advanced the concept of managerial discretion in different contexts, there would seem to be no published work on assessing the predictive efficacy of the underlying model developed in Hambrick and Abrahamson (1995) in the context of companies operating in other corporate geographic 4 spheres. ...
Purpose
The theory of managerial discretion and the direct insights it provides in the understanding of the varying impact strategic and operational actions have on organizational change and business fortunes is an area of research potential underexplored in the UK. This study aims to establish whether the measurement of managerial discretion is constant between the two similar societal corporate frameworks of the UK and the USA listed markets.
Design/methodology/approach
The extant managerial discretion ranking model, established in the USA, is empirically assessed for its validity and effectiveness across a sample of high- and low-discretion companies from the FTSE 350.
Findings
Using accounting measures, a clear and significant difference is established between UK high and low managerial discretion entities. The results prove to be significant in enabling the differential comparative analysis of the institutional characteristics of corporates.
Originality/value
To the best of the authors’ knowledge, no study of this nature has been conducted previously in the UK context. While the original model developed in the USA is now several decades old, the UK results reflect similar industry rankings as found originally in the USA, subject to some differences considered to be a result of the changing nature of global business since the 1990s. This study opens a new seam of novel research, which has the potential to uncover, at a granular level, the differential mores and character of management ethics, styles and practices in such issues as organizational change, corporate culture, governance and social responsibility.
... This process of coping with challenge stress can generate new knowledge or social capital, which is considered a valuable resource for entrepreneurs (Lerman et al., 2021). Importantly, entrepreneurial teams own significant managerial discretion and a broad range of actions (Hambrick & Abrahamson, 1995), allowing them to implement solutions quickly once identified (Klotz et al., 2014). ...
... Previous research on challenge-hindrance stress has mostly focused on how individuals react to stress and its consequences (e.g., Chen & Ellis, 2021;LePine et al., 2016;Sacramento et al., 2013;Wood & Michaelides, 2016), possibly because of the assumption that challenge-hindrance stress is exogenous and that individuals must passively accept and cope with it. However, entrepreneurial teams enjoy more managerial discretion and autonomy (Hambrick & Abrahamson, 1995), so their challenge-hindrance stress depends more on their own features. Indeed, as our study shows, entrepreneurial team faultlines have a significant impact on team-shared challenge-hindrance stress. ...
The topic of entrepreneurial team faultlines has been gaining ground in entrepre-neurship research, as it provides novel insights into the entrepreneurial team composition. However, our understanding of how entrepreneurial team faultlines affect new venture performance remains underdeveloped, especially concerning the different effects between informational and social category faultlines. Drawing on the challenge hindrance stress framework and conservation of resources theory, we develop and test a model to explore the mechanisms underlying the effects of the two types of faultlines on new venture performance. On the one hand, informational faultlines, serving as initial resource gains, are positively associated with team-shared challenge stress, which in turn increases new venture performance in a sort of gain spiral. On the other hand, social category faultlines, serving as initial resource losses, are positively associated with team-shared hindrance stress, which in turn decreases new venture performance in a loss spiral. The results from 102 Chinese entrepre-neurial teams comprising 399 members support our hypotheses. By clarifying the contrasting impacts of informational and social category faultlines within entrepre-neurial teams and by revealing the mediating effects of team-shared stress, this study contributes to a better understanding of how entrepreneurial team composition and stress influence new venture performance.
... According to upper echelons theory, managerial discretion determines to what degree the mindset of executives is reflected in organizational strategies and performance (Hambrick, 2007;Hambrick & Abrahamson, 1995;Hambrick & Finkelstein, 1987). In the management literature, managerial discretion refers to the perceived or substantial latitude for executives to exercise their talents or preferences to influence organizational results (Hambrick & Abrahamson, 1995;Hambrick & Finkelstein, 1987). ...
... According to upper echelons theory, managerial discretion determines to what degree the mindset of executives is reflected in organizational strategies and performance (Hambrick, 2007;Hambrick & Abrahamson, 1995;Hambrick & Finkelstein, 1987). In the management literature, managerial discretion refers to the perceived or substantial latitude for executives to exercise their talents or preferences to influence organizational results (Hambrick & Abrahamson, 1995;Hambrick & Finkelstein, 1987). In the case of this study, managerial discretion affects the extent to which a returnee CEO transfers the green cognitive imprints from his or her foreign experiences to the host country (Luo et al., 2021). ...
Drawing on imprinting theory and upper echelons theory, this study addresses how enterprises in emerging economies overcome low heterogeneity in ethical and causal cognitions through CEOs’ cross-border mobility to accelerate corporate green innovation. Using longitudinal data from 1270 Chinese publicly listed industrial companies from 2009 to 2018, we find that returnee CEOs (CEOs with foreign experience) positively affect corporate green innovation. This correlation is stronger for CEOs with deeper imprints from their overseas experience (i.e., going abroad for work instead of study and staying abroad in countries with high environmental awareness) and for CEOs with high managerial discretion (i.e., those with CEO duality or in highly competitive industries). Our research sheds light on how executives reestablish their ethical and causal cognitions through overseas experiences and the conditions under which the reestablished cognitions are greatly reflected in firm strategic choices for green innovation in emerging countries.
... Notably, the literature has documented the essential roles of CEOs in shaping the sustainable and environmental strategies of firms, i.e., their environmental policies and practices [12,17,[34][35][36]. Furthermore, CEOs are also responsible for the deployment of the financial resources of firms, which can be distributed to implement long-term strategic environmental management [37]. Moreover, the decisions taken by corporations regarding environmental investments hold significant weight in protecting the public environment. ...
The main objective of this study is to examine the influences of two novel characteristics of the foremost executive firm managers, i.e., the environmental and cultural values of CEOs, on corporate climate change performance. Employing a sample of firms listed in the FTSE250 covering the 2008–2018 period, we found that firms run by CEOs with environmentally friendly backgrounds and high ‘green’ cultural values are more inclined to aim for better (lower) greenhouse gas emissions. The findings hold after accounting for other relevant governance characteristics, accounting and market indicators, highly carbon-intensive industries, and potential endogeneity issues. Intriguingly, we also found that the effect of CEO environmental values is more pronounced than that of CEO cultural values. Our findings have implications for corporate management and regulators of climate change concerns and corporate environmental performance. That is, firm management is advised to assign CEOs with environmentally friendly backgrounds and high ‘green’ cultural values to lower greenhouse gas emissions.
... Such a manager must approximate what is often referred to as the "entrepreneurial manager," who not only has reasonable discretion to pursue unlikely projects but is also fueled with strategic knowledge to execute opaque ones. Discretion is necessary to the extent that the firm deals with more ambiguity in the means-ends relationship (Hambrick & Abrahamson, 1995); that is, when there is less prior knowledge regarding the usefulness of a given course of action and this knowledge is not easy to acquire, transfer, or share. ...
Given the influence of agency theory, corporate governance is tightly associated with the idea of monitoring. But what happens when the decision‐maker must act in an uncertain, open‐ended world? In this article, we propose a typology of firms' projects drawing on two parameters stemming from recent advancements in creativity theory: opacity and unlikelihood. This results in a matrix with four types of projects that display different qualities of entrepreneurialness: replicative projects, incubation projects, insightful projects, and innovative projects. We draw on the knowledge governance literature to suggest mechanisms and strategies of governance based on the prevailing type of project that the organization pursues. Our framework contributes to the theoretical understanding of the interplay between governance, creativity, and entrepreneurship literature while offering practical insights for designing better‐tailored governance mechanisms that align with a firm's prevailing project type.
... Because of this, munificent contexts attract many competitors (Palmer and Wiseman 1999). To better cope with competition, companies often need to implement non-routine decision-making processes (Abrahamson 1995), which in turn provide CEOs with strategic freedom (Li and Tang 2010) that enables CEOs to have greater influences on corporate strategies (Aylin 2020). Therefore, CEOs' discretion is enhanced in a munificence environment (Garcia-Sanchez and Martinez-Ferrero 2019), strengthening CEOs' impacts on corporate strategies. ...
CEO pay structure critically impacts a wide range of strategic choices, including corporate social irresponsibility (CSI), a pervasive and seriously damaging behavior. While the impact of CEO pay structure on CSI has received attention and focus, existing studies need to pay more attention to the potential role of CEO relative pay structure. Based on the behavioral agency theory, this study examines the impact of CEO underpayment and overpayment on CSI. Using panel data on listed companies in China from 2008 to 2019, we find that relative CEO underpayment is significantly positively correlated with CSI, and relative CEO overpayment is significantly negatively correlated with CSI. In addition, we find that industry-level managerial discretion strengthens the positive (negative) relationship between relative CEO under-payment (overpayment) and CSI.
... Firm performance is measured using return on assets (ROA) to control for the potential effect of firm performance on strategic change. We also controlled for managerial discretion, which determines a CEO's range of strategic options (Hambrick & Abrahamson, 1995). We used the absolute values of discretionary accruals to capture a CEO's discretionary decision in reporting accruals (Perotti & Windisch, 2017) as a measure of firm-level managerial discretion. ...
Becoming CEO is an emotionally charged event that is characterized by a sharp increase in visibility, responsibilities, expectations, and job vulnerability. Thus, rather than a “honeymoon” period, new CEOs are extremely busy learning about each aspect of the firm, developing relationships with stakeholders, and determining the firm's strategic direction. We suggest that the increased job demands associated with leading the firm, coupled with accentuated job vulnerability, alter the regulatory fit new CEOs experience, thus eliciting unique reactions depending on their regulatory foci. We argue that the increased vigilance and responsibility associated with becoming CEO fit the preferred goal pursuit means of CEOs high in prevention focus, increasing their motivation to engage in strategic change during the first 3 years of their tenure. Conversely, promotion-focused new CEOs engage in less change because they experience a misfit. We also consider how dynamics of the succession event further increase job demands and job vulnerability, moderating these relationships. Using a panel dataset of more than 800 public firms from 2000–2020, we find broad support for our hypotheses. Our primary contribution is showing that the sharp increase in job demands and job vulnerability that executives experience when they first become CEO shifts their regulatory fit and subsequent motivation to engage in strategic change in ways that prior theory would not predict.
... The study sample consisted of CEOs of S&P 1500 firms appointed between 2009 and 2018. We selected CEOs of manufacturing firms (two-digit Standard Industrial Classification [SIC] codes 20-39) as our sample because prior research shows that CEOs of manufacturing firms enjoy high managerial discretion, and thus their impact on firms' outcomes is stronger (Finkelstein and Hambrick, 1990;Hambrick and Abrahamson, 1995). Similarly, we consider only CEOs who started their tenure in or after 2009 and completed four or more years of tenure Hambrick, 2007, 2011 (Graafland and Smid, 2019;Surroca et al., 2010). ...
Purpose
This study aims to examine how chief executive officer's (CEO) personality traits influence the corporate sustainability performance (CSP) of firms. The paper also examines the moderating effect of board power on this relationship.
Design/methodology/approach
Using a linguistic tool (IBM's Watson Personality Insight Service), the authors measured the personality traits of 229 CEOs from 176 firms from 2009 to 2018. Firm-level CSP are obtained from the Sustainalytics database. The hypotheses are tested using multiple regression analysis. The robustness of the results of the study is confirmed by addressing endogeneity concerns and by validating the measurement of CEO personality traits using Personality Recognizer, an alternative linguistic tool.
Findings
The results show that CEO personality traits of extraversion and neuroticism are significant predictors of CSP. The paper also identifies board power as a contingent factor that influences the suggested relationships.
Originality/value
Using upper echelon theory and cybernetic big five theory, this paper identifies CEO personality traits as important antecedents of corporate sustainability performance and adds to the micro-foundations of corporate sustainability literature. To the authors’ understanding, this is the first study that examines the influence of CEO personality on CSP using a comprehensive trait framework. The paper also demonstrates the usefulness of text-analytic tools to measure CEO personality traits, thereby contributing to the progress of upper echelon theory.
... However, much remains to be learned about how different people within an organization use their discretion to achieve change outcomes or what limits their use of discretion (the individual, organizational and environmental factors that are key). 1 Notwithstanding, there are several research streams that are relevant, that is, on why some managers have more latitude to act as they see fit than others, including as a result of being in a particular industry or country (Hambrick & Abrahamson, 1995;Crossland & Hambrick, 2011), how discretion is required when using agile processes (Espedel, 2015), how discretion is negotiated (Finkelstein & Peteraf, 2007) and the relevance of subject matter expertise (Teece, 2003). ...
It is now generally accepted that strategies are rarely implemented as planned (Mintzberg, 1978). Strategies usually evolve over time as a result of many people interacting and utilizing a range of incremental processes to understand what should realistically be implemented as part of the strategy, essentially adjusting the strategy as required (Burgelman, 1983). However, despite learning much about how change outcomes are achieved, academics and managers are yet to agree on how successful strategic change outcomes are achieved (Stouten, 2018). It can be very difficult to achieve the benefits that a strategic project was designed to achieve (Zwikael & Smyrk, 2019).
... These environmental qualities can also influence the nature of team and leadership processes (Eisenhardt, 1989) and the strategic possibilities under consideration by senior leaderships teams. For example, environmental munificence increases strategic options open for choice (Hambrick & Abrahamson, 1995;Li & Tang, 2010). Also, environmental complexity creates a greater need for interdepend ence among senior leader teams and their members (Luciano et al., 2020). ...
... Board behavioral integration may render more accurate and deeper insights into board dynamics in entrepreneurial firms. Second, due to the 'informal, loosely structured, and fluid' nature of hightech start-ups (Picken, 2017, p. 588), coupled with the uncertainty of their survival, boards are more empowered and active, with higher stakes than boards in large firms (Hambrick & Abrahamson, 1995). Thus, boards' relational dynamics and behavioral exchanges have greater influences on organizational design (Garg & Eisenhardt, 2017), value creation (Bjørnåli, 2016), and strategy decision-making (Minichilli et al., 2012). ...
The board of directors’ behavioral dynamics can strongly influence an entrepreneurial firm’s success. Drawing on the behavioral theory of corporate governance, this study identifies and tests factors that facilitate behavioral integration in boards of high technology start-ups. We unpack the black box of board behavior with primary data collected from a survey-based sample of 149 CEOs of Norwegian high-tech start-ups supplemented by quantitative archival information. We find that intra-board behavioral integration (i.e., board members’ propensity to clearly understand one another’s issues and needs, actively solve, and share relevant information and resources) is positively affected by greater levels of informal communication between CEOs and board members. Next, we find that inter-board trust (i.e., board members interact with absolute integrity, tell the truth at meetings, trust one another, and keep mutual promises) mediates this relationship such that higher levels of inter-board trust result in greater concordance between information communication frequency and inter-board behavioral integration. We then examine the role of an efficacious board chair who motivates and uses each board member’s competence, formulates proposals for decisions and summarizes conclusions after board negotiation, and chairs board discussions without promoting their agenda, finding that efficacious board chair leadership moderates the relationship between informal communication frequency and intra-board trust. We discuss the implications of these findings for the theory and practice.
... However, the compositions of team members can still vary significantly for different tasks in the same organization and for similar tasks across different organizations. Teams with greater latitude over their own behavior are thought to have the greatest potential impact on firm performance (Hambrick & Abrahamson, 1995). Meanwhile, appropriate leadership style and conduct may be more critical for members of different backgrounds to work effectively together. ...
This study examined the effects of contrasting leadership styles on the behavior of team members in different group settings. Two leadership styles (directive and transformational) and two types of teams (functional and cross-functional) were controlled in an experiment to assess their impact on perceptions of procedural and interpersonal justice. The subsequent impact of procedural and interpersonal justice perceptions on leadership credibility and group commitment were also examined. The results suggested that leadership style and group type have different effects on team member’s perceptions of procedural justice and interpersonal justice. Leadership credibility was found to fully mediate the effects of procedural justice and interpersonal justice perceptions on group commitment.
... Standard errors clustered at the firm level in parentheses; *** p < 0.01, ** p < 0.05, * p < 0.1. Abrahamson (1995) and Adams et al. (2005), to shed light on the idea that while structured managerial practices may be applied across the board, managerial ability and its interaction with practices may matter in the context where managers can exert greater influence to affect corporate outcomes. In line with the above considerations, while the coefficient on the interaction term is positive in all the specifications, it is statistically significant only in the subsamples of firms more exposed to international competition, of those operating in effort-intensive or high-discretion industries. ...
... Such a manager must approximate what is often referred as the entrepreneurial manager, with not only reasonable discretion to pursue unlikely projects but also fueled with strategic knowledge to execute opaque ones. Discretion is necessary to the extent that the firm deals with more ambiguity in the means-ends relationship (Hambrick and Abrahamson 1995); that is, when there is less prior knowledge regarding the usefulness of a given course of action and this knowledge is not easy to acquire or transfer. ...
... The construct of managerial discretion has also been applied to outcomes at the national (e.g., Crossland and Hambrick, 2011), organisational (e.g., Morellec, 2004), investment (e.g., Dimov et al., 2007), and individual levels (e.g., Key, 2002). Hambrick and Abrahamson (1995) argue that the decision-making on various phenomena are not made in isolation, and have called for studies that explore the potential application of managerial discretion to other organisational phenomena. ...
... Apart from those related to the agency theory, Hambrick and Finkelstein (1987) contribute to the theory by formally introducing the concept of managerial discretion and suggesting that it can play an essential role in explaining some phenomena in companies, including compensation. Hambrick and Finkelstein (1987) defined managerial discretion as "the latitude of managerial action available to a decision maker", and argue that it can play an essential role in explaining some phenomena in companies, including executive compensation, which in line with the point of view from Hambrick and Abrahamson (1995) and Mueller and Yun (1997). The issue that is related to this research is the impact of managerial discretion on performance-based compensation, which has been illustrated by considerable empirical studies. ...
Employee compensation is the reward that reflects its value in providing services to the enterprise, including monetary compensation and non-monetary compensation. Monetary compensation refers to the economic income measured in currency obtained by employees by completing the work in their own positions, while non-monetary benefits are those that cannot be measured in currency, such as the distribution of self-produced products and provision of benefits such as health care services. Therefore, remuneration is a measure and manifestation of the value that employees bring to the company for their services. In this paper, reviews on the relationship between cash compensation of senior executives and bank performance are conducted from the aspects of definition of compensation requirement and bank performance, worldwide theoretical reviews, and empirical reviews. Based on the analysis of relationship between compensation and bank performance as well as managerial discretion and pay-performance sensitivity in different literatures, the laggings in China’s studies are discussed in the end.
... The more complex the firm becomes, the more important it is that strategy be developed and executed consistently (Connelly, Tihanyi, Ketchen, Carnes, & Ferrier, 2017). When an organization is less complex, strategy is more straightforward and conflicting strategic directives should be less common and less likely to adversely impact the organization, as executives face lower discretion overall and there are only so many directions along which strategic leaders could diverge (Hambrick & Abrahamson, 1995;Hambrick & Finkelstein, 1987). As the organization becomes more complex, however, strategic decisions become more complex, and disagreements between strategic leaders at the top of the firm are more likely (Carpenter, 2002). ...
Traditional agency theory views the proper role of the board chair exclusively as providing independent oversight to monitor and control the CEO. Recently, firms have introduced innovations in board leadership that have confounded these theoretical expectations. One notable innovation is the executive board chair, a corporate governance hybrid responsible for both oversight and strategic decision-making, challenging agency theory's prescription that the two activities remain separate. In this study, we argue that an executive board chair position can resolve the trade-off between independent oversight and involvement in strategy and therefore generate a performance advantage. We also predict that, owing to the blurring of lines between the CEO and board chair roles that the executive board chair position creates, the relationship will be stronger the greater the need to monitor and control the CEO but weaker when organizational complexity and board leadership demands are greater. Analysis of S&P 1500 firms from 2003 to 2017 provides general support for our arguments.
... Fourth, the prior literature suggests that the uncertainty of the situation positively influences the organizational discretion (Hambrick & Abrahamson, 1995). We extend this position and argue that the uncertainty of the situation contributes to the discretion in decision-making, and the interpretation of the uncertainty mediates this relationship. ...
Knowledge-based organizations pose an innovation project ‘scope–risk paradox’ in their innovation projects. On the one hand, the uncertainty of the broader scope avails them opportunities to delegate responsibilities to the environment; on the other hand, an elevated risk–reward evaluation hampers their aspirations. This article suggests a solution: the prestige of the decision ecology inflates rewards and deflates risks in the scope decision. This decision ecology of the research and development (R&D) project consists of five prestige factors: (a) technological, (b) organization-specific, (c) nationality, (d) temporality and (f) structural. High prestige of these contextual elements implies that they influence the perceived reward to risk ratio. High prestige predicts high risk-taking, leading to a broader scope of the innovation project. The evidence supports that the technological prestige, organizational prestige, temporal prestige and structural prestige contribute to the broader scope decision of the R&D project in the clinical trial. However, the project nationality shows no difference. Overall, we conclude that the interpretative decisions based on the situation prestige influence the R&D project in the biopharmaceutical sector; therefore, the prestige of these ecological factors should matter in other disciplines. Other disciplines that draw value from the social context will show more pronounced effects of the prestige on decisions. Hence, this study sets a foundation for the theory and practice in other projects, organizations, sectors and nations
... As pointed out by Abebe et al. (this issue), finding new ways to create and capture value may require a complete "digital reorientation strategy" which will be painful for the declining firm's managers and employees, as it goes beyond just changing products and/or services to altering core ways of doing business via digitalization. However, when industries spend large sums of capital on research and development, as would be the case with a quickly digitalizing industry, managerial discretion for making the firm unique from competitors also increases (Hambrick and Abrahamson, 1995). ...
... Finally, we controlled for industry sectors to tease out organizationlevel effects from industry-level effects (Takeuchi et al., 2009). This is because industry characteristics (e.g., industry capital intensity, industry differentiation, and industry dynamism) are likely to affect organizations' management process and need for innovation (Combs et al., 2006;Datta et al., 2005;Hambrick & Abrahamson, 1995). In addition, industries differ in research and development (R&D) intensity, which is directly associated with organizational innovation (Andras & Srinivasan, 2003;Lee, 2002). ...
As the diversity field evolves, scholars are shifting the attention from mitigating "problems" associated with diversity to searching for ways to leverage the potential value in diversity. We advance this field by studying how an inclusive climate benefits organizational innovation, an important foundation for sustained competitive advantage. Adopting a synergy perspective, we examine the internal (i.e., workplace demographic diversity in terms of age, gender, and region) and external contingencies (i.e., environmental scanning and environmental uncertainty) for an inclusive climate to foster incremental and radical innovation through the mechanism of knowledge management capacity. We tested our research model with a three-wave data collection from multiple sources (i.e., employees, human resource managers, and executives) in 102 organizations. We found that workplace age and regional diversity (but not gender diversity) strengthened the positive effect of inclusive climate on knowledge management capacity, and subsequently incremental and radical innovation. The facilitating effect of environmental scanning was only significant for organizations that experienced higher environmental uncertainty. Our research highlights the importance of considering the synergistic potential of internal human resources and external environments for organizations to capitalize on their inclusive climate for knowledge management and innovation. (PsycInfo Database Record (c) 2022 APA, all rights reserved).
... The construct of managerial discretion has also been applied to outcomes at the national (e.g., Crossland and Hambrick, 2011), organisational (e.g., Morellec, 2004), investment (e.g., Dimov et al., 2007), and individual levels (e.g., Key, 2002). Hambrick and Abrahamson (1995) argue that the decision-making on various phenomena are not made in isolation, and have called for studies that explore the potential application of managerial discretion to other organisational phenomena. ...
The purpose of this study is to apply Hambrick and Finkelsteins (1987) framework of managerial discretion to the field of Capital budgeting techniques (CBT). This study uses a qualitative method based on semi-structured interviews with 12 CFOs in Swedish high-growth small and medium-sized firms (SMEs). The findings indicate that the choice of CBTs is largely enabled by individual forces and mainly disabled by environmental and organisational forces. The study contributes with managerial implications discussing how the choice of CBT is beneficial for communication, negotiating for resources, and maintaining good relationships with stakeholders. Being aware of how to use the choice of CBT as a communication tool could give firms a competitive advantage.
... These definitively look like deterring factors to the thoughts in managers' System 1 . Environmental instability was revealed as a positive determinant of managerial discretion (Hambrick and Abrahamson, 1995) and, coherently, Finkelstein and Peteraf (2007) concluded that higher uncertainty activities increase managerial discretion by reducing the likelihood and effectiveness of constraints on managerial action . Thus KPIs, benchmarks, contracts and all the deterring factors for managerial discretion contemporarily reduce uncertainty of managerial activities and likelihood of arising cognitive biases. ...
Purpose
The purpose of this paper is twofold: to provide a clear picture on the cognitive biases affecting managers’ decision-making process of implementing a performance management system (PMS), and to identify managerial practices, measures and the key challenges to manage the cognitive biases in the corporate strategy.
Design/methodology/approach
Semi-structured interviews, based on theoretical milestones of performance management and cognitive psychology, gathered from 104 experienced professionals’ evaluations on the likelihood and impact of managers’ cognitive biases in PMS implementation, potential solutions as well as drivers and connected criticalities.
Findings
Recurring cognitive biases, together with considerable impacts, emerged in the first, and most strategic, phases of the PMS implementation. The authors developed a roadmap to support corporate transition to integrate behavioral strategy into the PMS implementation aiming to achieve economically and efficiently sound performance.
Research limitations/implications
From the view of proper behavioral strategy affirmation in performance management literature, in a small way, the authors contribute to a desirable taxonomy of cognitive biases so differentiated decision-making scenarios may be built to compare results and draw new observations. Behavioral studies could transversally connect the cognitive biases of performance management to actors’ sociodemographic features and personality types. Practitioners may check biases affecting their organizations by means of the questionnaire and, consequently, adopt the framework illustrated to reduce them.
Originality/value
Performance management literature has constantly investigated positive and negative behavioral factors related to the PMS. This study, instead, makes a theoretical and methodological contribution to the PMS implementation as a decision-making process. The authors propose a theoretical framework that integrates cognitive psychology insights and applies measures to reduce biases.
... Zhang and Rajagopalan (2003, p. 329) supports this view of CEO labor market by arguing that 'supply and demand factors should be specific to a (CEO labor) market and hence, different managerial labor markets should reflect different supply and demand conditions.' Similarly, managerial discretion literature argues that a CEO's degree of discretion (i.e., latitude of action) will vary by industries and thus most CEO-related factors will also differ across industries (Finkelstein & Hambrick, 1990;Haleblian & Finkelstein, 1993;Hambrick & Abrahamson, 1995;Hambrick & Finkelstein, 1987). In highdiscretion industries, for example, CEOs can make greater impact on firm performance and therefore they receive a higher amount of compensation and higher incentive pay than CEOs in low-discretion industries. ...
Previous corporate governance research has paid little attention to the role of chief executive officer (CEO) labor markets in controlling CEO behaviors because the CEO labor market has been considered inefficient. With the increasing mobility of top executives across firms, however, the potential of CEO labor markets to serve as an external disciplining force has been growing. In this study, we argue that CEOs will be more pressured to engage in desirable behaviors as the CEO labor market becomes more efficient. Using a longitudinal sample of S&P 1500 firms in high-technology industries in United States from 2011 to 2019, we found that CEOs tend to increase R&D investment as CEO labor market supply increases. We also found that the tendency is greater when external CEO succession is more frequent in the market. Our results demonstrate that CEO labor markets have the potential to function as an effective external governance mechanism.
... This ensured an objective verification of our classification (c.f. Crossland and Hambrick, 2011;Frankenberger and Sauer, 2019;Hambrick, 1982;Hambrick and Abrahamson, 1995;Souitaris et al., 2012). The evaluations of the industry experts corresponded perfectly with our initial estimation, apart from slight but insignificant derivations. ...
Ecosystems are formed by organisations that jointly create a value proposition that a single firm could not create in isolation. To deliver this value proposition, the partners need a focal firm, the orchestrator, to be align them towards the joint value proposition. Thus, how orchestrators design the alignment structure of an ecosystem is at the very heart of the ecosystem concept-yet it has not been sufficiently addressed by extant research. This is all the more true for the question of how the design of an ecosystem is shaped depending on surrounding conditions. This paper applies a qualitative study with ten cases and, based on the attention-based view of the firm, contributes to research on ecosystems in several ways. First, it explains which ecosystem designs are beneficial under which conditions. Second, it elucidates the structure and activities within ecosystems and shows that start-ups can be just as good ecosystem orchestrators as incumbents. Third, it explains the circumstances under which single vs. multi orchestrator ecosystems occur. Fourth, it presents the conditions when incumbents or start-ups make better orchestrators. Finally, it is among the first studies to apply the attention-based view to business ecosystems, and shows that doing so yields intriguing insights into this emerging field of research.
The growing literature at the intersection of executives’ characteristics and stakeholders’ evaluations argues that executives’ characteristics not only have “first-order effects” on their organizations’ actions and outcomes, as in upper echelons theorizing, but also give rise to “second-order effects” or “opportunity structures,” whereby stakeholders evaluate and react to focal executives’ organizations based on those characteristics. Despite many insights from the burgeoning literature on the second-order effects of executives’ characteristics on stakeholders’ evaluations and reactions, the literature lacks a comprehensive framework with core tenets by which stakeholders form evaluations of executives’ characteristics that drive their actions (or, reactions, as it were) based on such characteristics and the ensuing outcomes. In turn, knowledge from the proliferating literature on how stakeholders react on the basis of their evaluations of referent organizations’ executives’ characteristics is fragmented, consisting of a series of disconnected findings and attendant insights scattered across various theoretical and topical domains. We conducted a framework synthesis of the literature to iteratively derive a conceptual framework from extant research—which we call the stakeholder view of upper echelons—that synthesizes knowledge at the intersection of executives’ characteristics and stakeholders’ reactions around this framework. In doing so, we provide the foundation for future research to help extend knowledge in this important domain. We identify several avenues that are important for future work to address and provide practical implications from our framework.
While previous hospitality and tourism research has concentrated on the benefits of information and communication technology (ICT) adoption from the perspectives of customers and suppliers, less attention has been placed on this stream of research from an upper echelons perspective. Furthermore, a limited number of studies have explored the relationship between ICT adoption and its financial implications. Using various theoretical foundations (i.e., upper echelons theory, industrial organization theory, resource-based view, and organizational learning theory), this study attempts to provide an overarching conceptual framework that can explain the antecedents and consequences of adopting ICT. More specifically, this paper delves into industry- and firm-specific conditions to better understand the relationship between a top management team’s (TMT) attributes and ICT adoption as well as the relationship between ICT adoption and its financial implications.
Purpose
This study aims to deliver a new perspective on how the interaction of independent and cooperative innovation affects firm digitization. Based on resource constraint theory, this study argues that the aforementioned interaction negatively affects firm digitization. The moderating role of managerial discretion is also discussed in light of the principles of the awareness-motivation-capability (AMC) framework.
Design/methodology/approach
The proposed hypotheses are empirically tested using a negative binomial modeling approach. The data used are from A-share listed companies in China’s Shanghai and Shenzhen stock markets from 2006 to 2020.
Findings
This study suggests that the interaction of independent innovation and cooperative innovation negatively impacts digitization. In addition, this study argues that environmental discretion and organizational discretion weaken the negative impact of the mentioned interaction on digitization. However, additional discretion in the Chinese context has no effect on above relationships.
Originality/value
This study explores the impact of the interaction of independent and cooperative innovation on digitization and incorporates managerial discretion into this framework based on the AMC framework.
We provide large-scale empirical evidence of how much chief executive officers (CEOs) change corporate culture. To do this, we use employee reviews to measure corporate cultural change in S&P 1500 firms. In a variance decomposition analysis, we find a modest effect of CEOs on corporate cultural change. The effect of CEOs on cultural change is larger than industry effect but smaller than firm effect. Regression analysis in the context of CEO succession further shows consistent evidence of a modest effect of CEO succession on corporate cultural change. In addition, the relationship between CEOs and cultural change is not likely to be fully explained by time trend, reverse causality, sample selection bias, and omitted variable bias. An investigation into the contextual contingencies of the CEO-cultural change relationship suggests that succession characteristics, such as predecessor influence and turnaround situation, weaken postsuccession cultural change, but industry task environment has a weak moderation effect. Overall, our study contributes to the literature on strategic leadership and corporate culture.
Funding: X. Li acknowledges financial support from the Ian Potter (‘93D) PhD Award.
Supplemental Material: The online appendix is available at https://doi.org/10.1287/orsc.2022.17210 .
Purpose
In today's competitive business environment, understanding how leadership traits shape outcomes is critical. Chief executive officer (CEO) narcissism, an intriguing and debated trait, raises questions about its impact on organisational behaviour, particularly regarding entrepreneurial orientation (EO). This study aims to examine how CEO narcissism affects EO, both as aggregate and specific measures, encompassing internal and external growth. It also considers the organisational context by examining how factors such as capital intensity, firm ownership and CEO duality moderate this relationship.
Design/methodology/approach
To test the hypotheses, the authors used a sample of firms drawn from China's ChiNext database (2008–2017). After an initial screening, the final sample consists of 251 CEOs from 239 companies. Data on CEO narcissism are collected from the firm's official website and major online sources, whilst additional data are extracted from the WIND daabase. The authors use multiple regression and ordinary least squares (OLS) for data analysis.
Findings
The results show that CEO narcissism leads to external asset growth investments but not internal research and development (R&D). There is a positive relationship between CEO narcissism and EO as an aggregate measure and also different managerial discretions play varying roles in the relationship. Specifically, capital intensity weakens this relationship, but state ownership strengthens it.
Originality/value
This study helps to clarify the relationship between CEO narcissism and EO and advances the literature by showing that firms' EO actions may take various forms of innovation and venturing as new entry initiations of EO. The study findings have important implications for firms to capitalise on narcissistic CEOs' entrepreneurial tendencies, balance internal R&D and external asset growth and leverage various managerial discretions.
This study has examined the impacts of top executives’ discretion on organizational performance in public organizations. We analyzed longitudinally collected data from quasi-governmental organizations in Korea. The results show that top executives’ managerial discretion has an inverted U-shape relationship with the overall performance of organizations. The marginal effect of top executives’ discretion on organizational performance was negative. This suggests that the benefits from top executives’ discretion decrease as the level of managerial discretion increases. The greater discretion of top executives in project management was more likely to yield desirable outcomes for organizations. Top executives’ discretion did not significantly affect customer satisfaction and transparency of organizations.
Points for practitioners
This study has empirically shown that there exists an inverted U-shape relationship between managerial discretion and organizational performance. It is necessary to let public managers exercise their discretion in managing their businesses given that flexibility and innovativeness in decision making serve key roles in effective organizational management in highly turbulent organizational contexts. It will also be important to properly monitor public managers’ discretionary authority to avoid unintended negative consequences of discretion.
Today's organizations are dealing with a turbulent and unpredictable business environment. In these uncertain times, it is critical that managers at all levels have a deep understanding of discretion as part of the decision-making process. This study investigated the relationship between perceived managerial discretion and project success in the upstream oil and gas sectors. A total of 108 project managers participated in this study. We analyzed data using covariance-based structural equation modelling (CB-SEM) to construct a framework that highlights the importance of dynamic managerial capabilities and organizational agility on perceived managerial discretion. The results confirm and emphasize the direct role of perceived managerial discretion on project success. The study notes the essential roles of strategic management literacy in mediating the relationship between perceived managerial discretion and project success in Indonesia and provides insights for middle managers seeking to foster the success of projects by considering strategic management literacy.
Personality traits favored by situational factors may lead to destructive tendencies in a good leader. For example, CEOs such as Larry Page of Google, Lloyd Blankfein of Goldman Sachs, Mark Zuckerberg of Facebook, and Elon Musk of Tesla have exhibited a shift from constructive to destructive leadership style due to situational or environmental factors. Destructive or dark leadership style is associated with personality traits such as narcissism, Machiavellianism, and psychopathy. This chapter introduces the concept of personality disorders that might threaten the effectiveness of an individual as a leader. It will further discuss the factors that contribute to the development of destructive personalities and different types of destructive personalities. This chapter will identify the role of followers and environment that provide legitimacy for immoral actions. It will provide solutions to improve leadership practices to reduce toxicity in the work environment and create a positive workplace.
The study of leadership is a rapidly evolving, multi-faceted field. Leadership is conceptualized as a social and cultural phenomenon, which cannot be fully understood from a single perspective. The leader, the follower, the context, and the interactions amongst these elements must all be considered. The Oxford Handbook of Leadership explores the complex relationship between leader, led, and the environment that constitutes leadership. Divided into five parts, it provides comprehensive coverage of the field, exploring the roles individual attributes, training, and development play in generating a leader who is capable of performing effectively. The book also examines the relationship between leadership and contextual factors in terms of an organizational role, one's culture, and a specific setting (e.g. military, higher education, and presidential). It furthermore takes a critical look at the extent to which leader and follower behavior in a social and/or organizational context are tied. The book also gives a consideration of what leader effectiveness means (i.e., what differentiates effective from ineffective leadership, including insights and scholarship that have emerged regarding this issue). A concluding chapter provides some overall comments concerning the current state of leadership research and some thoughts about potentially fruitful directions. Leadership research has come a long way, but the inherent dimensionality of the field leaves room for new insights and new directions.
This study examines whether and when humble CEOs lead firms that behave more entrepreneurially. Guided by upper-echelons theory, we link CEO humility with corporate entrepreneurship, considering two specific discretionary sources in the firm’s task environment—market turbulence and market complexity—as moderators. We test our hypotheses using multi-source data from small Indian firms. We find that the association between CEO humility and corporate entrepreneurship is positive and significant, strengthening at higher levels of humility. Systematic post hoc analyses yield evidence for the moderating influence of market turbulence and complexity. Implications and directions for future research are discussed.
This study examines the knowledge structures (KSs) of CEOs of firms that attempted turnaround from performance decline. We developed and tested a theoretical model that describes how two cognitive characteristics of CEOs, complexity and centrality, influence the likelihood of turnaround. It is found that CEO KS centrality directly increases the chance of turnaround. In addition, CEO KS complexity is found to increasingly improve the chance of turnaround as a firm in decline launches a greater extent of strategic change to their organization. Together, in theory, our research suggests that CEO cognitive competencies matter for managing successful turnaround attempts. Practically speaking, the findings of this article imply that to improve their chance of achieving successful turnaround, declining firms should look for CEOs who are cognitively focused or who are cognitively complex enough to engage in the degree of strategic changes launched to save the firm.
JEL Classification: L20, M1
The stagnation of investments and its causes have attracted great attention in the recent economic debate. In this paper, we show that during the Great Recession, the flattening of the capital formation rate at the firm level is not due to lower average propensity to invest. Rather, it is the result of growing heterogeneity of choices among firms. While a subset of firms is oriented towards increasing investments, another group substantially divest. The result is a polarization of conducts that tend to cancel each other out, resulting in a flattening of aggregate investment. We argue that this asymmetry in firm’s decisions depends on two main factors. The first one is the diversity of corporate strategies, which firms have developed in the past. The second driver is managerial discretion, that plays an important role in the adoption of specific investment/divestment trajectories when faced with a recession. The results of our empirical analysis provide strong support for our hypotheses: after controlling for contextual and firm-specific structural, financial and demographic variables, corporate strategies and managerial discretion in the allocation of liquid assets explain large part of the heterogeneity in investment decisions during the recession. Policy implications are discussed.
Managerial discretion is the latitude that executives have to affect the activities of the companies they run, as opposed to merely accepting internal and external influences. There are two distinct streams of literature. In one, 10.1057/978-1-137-00772-8_570, managers are assumed to be opportunistic and likely to misallocate firm resources to their own use unless restrained by well-designed incentives, weighty governance or heavy debt burdens that limit the availability of discretionary capital. The other stream is sanguine about managerial motivation and measures discretion by the financial latitude that management has to allocate or reallocate resources to high-yield purposes. Empirical research is ongoing in both streams.
While real options theory has been applied with the optimality assumption, actual real options investments are made by managers, who are subject to cognitive biases, especially under uncertainty. In this paper, we focus on one important type of cognitive bias, overconfidence, to provide new insights on real options literature. We argue that overconfident CEOs will invest less in real options than non‐overconfident CEOs. We also predict that the relationship between overconfident CEOs and firms’ real options intensity will be strengthened when market uncertainty is higher. In a study of U.S. public firms, we find strong support across various tests that use multiple measures of overconfidence in CEOs and real options investments, and control for potential selection issues and other endogeneity concerns. This paper studies how a CEO's cognitive bias, overconfidence, may shape a firm's real option investments, which could result in a different level of strategic flexibility. We argue that overconfident CEOs have overly high expectations of their performance under uncertainty and/or underestimate the level of uncertainty in their strategic decision‐making, which leads to lower investments in the firms’ real options relative to non‐overconfident CEOs. We study a sample of U.S. public firms and find strong evidence that an overconfident CEO is positively related to the real options investments at the firm level. We also find that this overconfidence effect becomes more pronounced in markets with greater uncertainty. This article is protected by copyright. All rights reserved.
Purpose
This study aims to analyze the moderating effect of managerial discretion on the relationship between cross-border knowledge search and the high-tech firms’ innovation quality in a global health emergency and addresses the following issues: the influence mechanism of different types of cross-border knowledge search on the high-tech firms’ innovation quality in a global health emergency; and the moderating role of different dimensions of manager discretion on the above relationship.
Design/methodology/approach
Based on the firms’ strategy selection methods, the authors divided cross-border knowledge search into three aspects, namely, breadth, depth and balance, and analyzed the impact of cross-border knowledge search on the innovation quality of high-tech firms in a global health emergency, taking managerial discretion as the moderating variable, and divided it into position rights, pay rights and operation rights according to the key rights of firms’ strategic management. Furthermore, the authors constructed a theoretical model, and for an analysis sample, the authors collected data from Chinese high-tech firms from 2013 to 2021.
Findings
The empirical results show that there is an inverted U-shaped relationship between cross-border knowledge search breadth, depth and balance and the innovation quality of high-tech firms. The position rights, pay rights and operation rights of managerial discretion have partially significant moderating effects on the relationship between cross-border knowledge search breadth, depth and balance and the high-tech firms’ innovation quality.
Originality/value
Considerable literature has grown around the theme of the impact of knowledge search on the firms’ innovation quality. Nevertheless, only a few studies draw on the combination of global health emergency, cross-border knowledge search and the innovation quality; in particular, no literature has analyzed the relationship between the three from the managerial discretion perspective. Exploring the above relationships has great theoretical value for enriching and improving knowledge management and innovation management theories and provides a theoretical basis and practical support for high-tech firms to face challenges of a global health emergency and to break through the innovation dilemma.
Research Summary
Hambrick and Quigley's (2014) “CEO in context” (CiC) technique leads to a much larger CEO effect than traditional ANOVA or multilevel modeling. We replicate H&Q's study, apply their CiC technique to a much more comprehensive U.S. sample, and assess the sensitivity of the model findings to variations in method and data. We generally confirm H&Q's finding of a high CEO effect, but find a smaller industry effect and a larger firm effect in our much larger sample. Applying the CiC technique with adjusted R ² s has only a moderate impact on year, industry, and firm effects, but markedly reduces the CEO effect. We also document that CiC model findings are sensitive to sample characteristics, namely firm size and CEO tenure.
Managerial Summary
Hambrick and Quigley (2014) introduced a new method to analyze the influence of CEOs on firm performance. The study's empirical analysis focused on large U.S. firms. We replicate the original study and extend it to a much larger, comprehensive sample of U.S. firms that is composed of 33,996 firm‐year observations, compared to 4,866 firm‐years in the original study. Controlling for the number of variables used in the estimations, the model attributes about a third of the total variance of firm performance (ROA) to the CEO. Further analyses show that the model findings differ for firms of different size and CEO tenure; the larger the firms and the longer the CEO tenures, the smaller tends to be the percentage of variance explained by the CEO.
Using a longitudinal analysis of publicly traded Fortune 500 firms, the authors find support for their hypotheses that a relative increase in female influence in the top management team (FITMT) is positively associated with 1) customer orientation of the firm, and 2) long-term financial performance (i.e., Tobin’s q). They demonstrate that customer orientation partially mediates the relationship between FITMT and long-term financial performance. The authors also explore environmental and corporate governance factors that moderate the link between FITMT and customer orientation. They find that this link is attenuated for firms that operate under high environmental dynamism and low environmental discretion, and for firms with high family ownership. Having high female representation among board members and more marketing-experienced board members strengthens the link between FITMT and customer orientation. These findings have important implications for scholars, boards, CEOs, and investors interested in identifying environmental and corporate governance factors that facilitate a greater focus on customers at the highest levels of the firm.
Research Summary
We build upon evidence suggesting the precariousness of the situation organizations face when trying to fill chief executive officer (CEO) openings affects both which executives seek and accept such positions and which executives are sought and endorsed by those tasked with hiring. We argue that while more precarious situations likely deter some executives from pursuing and/or accepting such opportunities, more hubristic executives' tendencies make them likely to do so despite the associated challenges. Concordantly, those tasked with filling CEO openings likely view more hubristic executives as particularly important for combatting the challenges of more precarious situations, leading them to seek and endorse such executives. Using multiple conceptualizations of precarious situations, we find support for our arguments in a sample of CEO changes in S&P 500 firms.
Managerial Summary
Why do organizations select more hubristic executives to fill CEO openings? We answer this question by highlighting the role that situational precariousness plays. Specifically, not all CEO openings are equally attractive to prospective CEOs and not all prospective CEOs are equally attractive to decision makers tasked with filling such openings. We argue and find support for the notion that more hubristic executives' tendencies make them more likely to pursue and accept CEO opportunities at organizations in more precarious situations while those tasked with filling CEO openings likewise believe more hubristic executives' tendencies are particularly important given the precarious situations those organizations face. Our findings advance knowledge of CEO hubris and provide insights for practice.
Chief Executive Officer (CEO) personality belongs to the most important constructs for business practice and research, but its measurement remains a major obstacle. Therefore, I propose a language‐based approach of freely available, large‐scale corporate documents to study linguistic hints regarding CEOs' personality dimensions by applying a validated, closed‐based approach developed to a sample of Fortune 500 companies. I compare the results to validated, machine learning‐trained open‐based results obtained from conference calls of 3000 CEOs of S&P 1500 companies. In order to provide a basis for comparison, I supplement these linguistic personality profiles with a sample of convicted criminal CEOs that provide an archetype of extreme linguistic cases. Finally, after controlling for commonly used content analytical constructs (e.g., entrepreneurial orientation, market orientation) to capture CEOs' cognitive state, I link these cross‐sectional linguistic profiles to longitudinal firm‐level performance data. The analysis indicates that the linguistic manifestations of CEO personality explain a great share of firm performance in conjunction with observable individual, industry, and firm‐level data. While there appear to be complementarities between open‐based and closed‐based language approaches, the analysis also indicates that the open‐based linguistic trait of neuroticism is negatively related to various measures of firm performance. In particular, these measures appear to be more robust against genre effects and language that are unique among CEOs (self‐selection effects). Therefore, the approach sheds light on the important role of validation procedures in the realm of computer‐aided content analysis (CATA) and the conducive and detrimental effects of CEO personality cues on firm performance. The paper discusses practical implications for stakeholders and shareholders wishing to infer personality cues of key decision‐makers from large‐scale corporate documents and theoretical implications for the advancement of the upper echelon research.
This study examined how managerial discretion “stranglehold” influences enterprise investment efficiency (IE) using a heterogeneous stochastic frontier model of 2010–2019 data of listed companies in the Shanghai and Shenzhen A-share markets. CEO’s salary and stockholding can improve IE, but cannot reduce investment risk (IR). CEO duality and redundant resources neither improve IE nor reduce IR. Organizational inertia can reduce IR but not IE. Capital intensity increases IR whereas environmental richness reduces it; both cannot improve IE. Constrained managerial discretion brings investment expenditures to 15–25% below optimal. Relatively, large, non-state-owned, and manufacturing enterprises have higher IE and lower IR.
Purpose
Through the lens of the upper echelons theory, this study aims to investigate how generalist chief executive officers (CEOs) affect social novelty. This paper also explores the moderating effect of CEO power on the relationship between generalist CEOs and social novelty.
Design/methodology/approach
This study uses generalized estimating equation models and robust standard errors by firm to correct for autoregressive disturbances within clusters in the data.
Findings
Restaurant firms with generalist CEOs are likely to feature gender diversity and member change in the top management structure. This positive effect of a generalist CEO on top management team’s (TMT) structure is enhanced by the CEO’s power over board members.
Practical implications
This study presents important evidence that CEOs’ characteristics largely influence the gender heterogeneity and dynamic of the TMT, which in turn promote and shape innovative initiatives and actions.
Originality/value
To the best of the authors’ knowledge, this paper is one of the first to investigate the effect of CEOs’ human capital on the way in which the TMT is composed and characterized in the restaurant sector.
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