Strategic Leadership Theory and Research on Executives, Top Management Teams, and Boards

by Cannella, Bert; Finkelstein, Sydney; Hambrick, Donald C.

• ISBN13: 9780195162073
• ISBN10: 0195162072
• Format: Hardcover
• Copyright: 2008-11-05
• Publisher: Oxford University Press

Summary

This book integrates and assesses the vast and rapidly growing literature on strategic leadership, which is the study of top executives and their effects on organizations. The basic premise is that in order to understand why organizations do the things they do, or perform the way they do, weneed to deeply comprehend the people at the top-- their experiences, abilities, values, social connections, aspirations, and other human features. The actions--or inactions--of a relatively small number of key people at the apex of an organization can dramatically affect organizational outcomes. The scope of strategic leadership includes individual executives, especially chief executive officers (CEOs), groups of executives (top management teams, or TMTs); and governing bodies (particularly boards of directors). Accordingly, the book addresses an array of topics regarding CEOs (e.g.,values, personality, motives, demography, succession, and compensation); TMTs (including composition, processes, and dynamics); and boards of directors (why boards look and behave the way they do, and the consequences of board profiles and behaviors). Strategic Leadership synthesizes what is known about strategic leadership and indicates new research directions. The book is meant primarily for scholars who strive to assess and understand the phenomena of strategic leadership. It offers a considerable foundation on which professionals involved inexecutive search, compensation, appraisal and staffing, as well as board members who evaluate executive performance and potential, might build their tools and perspectives.

Author Biography

Sydney Finkelstein is the Steven Roth Professor of Management at the Tuck School at Dartmouth College, where he teaches courses on Leadership, Top Management Teams, and Managing Mergers and Acquisitions. He is also Faculty Director of the flagship Tuck Executive Program, as well as a consultant for companies around the world. Professor Finkelstein has conducted extensive research on strategic leadership, published numerous articles in the major journals in his field, and has written ten books.
Donald C. Hambrick is the Smeal Chaired Professor of Management, Smeal College of Business Administration, at The Pennsylvania State University. He holds a PhD degree from The Pennsylvania State University. His research focuses primarily on the study of top executives and their effects on strategy and performance. An active consultant and executive education instructor, he also served as president of the Academy of Management.
Albert A. Cannella Jr. is Koerner Chair in Strategy and Entrepreneurship at Tulane University. He received his Ph.D. from Columbia University in 1991. He serves on the editorial review boards of Academy of Management Journal, Journal of Management, Journal of Management Studies, Administrative Science Quarterly, and Strategic Management Journal. His research interests focus on executives, entrepreneurship, and competitive dynamics.

Table of Contents

The Study of Top Executives	p. 3
The Essence of Strategic Leadership	p. 4
Academic Attention to Executives: A Historical View	p. 6
The Scope of Strategic Leadership	p. 9
Chief Executive Officers	p. 9
Business Unit Heads	p. 10
Top Management Teams	p. 10
Boards of Directors	p. 11
Additional Matters of Scope	p. 11
Overview of the Book	p. 12
Do Top Executives Matter?	p. 16
What Do Top Executives Do?	p. 17
Basic Dimensions of the Job	p. 19
Do Managers Matter? A Doubtful View	p. 20
Do Managers Matter? A Positive View	p. 22
Problems with Lieberson and O'Connor's Study	p. 23
Evidence of Executive Effects	p. 24
Managerial Discretion	p. 26
Environmental Sources	p. 27
Organizational Sources	p. 31
Individual Sources	p. 33
Effects of Discretion	p. 34
Executive Job Demands	p. 37
The Managerial Mystique	p. 38
Conclusion	p. 40
How Individual Differences Affect Executive Action	p. 43
A Model of Human Limits on Strategic Choice	p. 44
The Filtering Process	p. 46
Executive Orientation: An Overview	p. 49
Psychological Characteristics as Bases for Executive Action	p. 51
Executive Values	p. 52
Cognitive Model	p. 59
Executive Personality	p. 70
Positive Self-Regard	p. 76
Conclusion	p. 82
Executive Experiences and Organizational Outcomes	p. 83
Executive Tenure	p. 85
Tenure and Executive Psychology	p. 85
Tenure and Organizational Strategy	p. 90
Tenure and Performance	p. 93
Functional Background	p. 97
Functional Experiences and Executive Perceptions	p. 97
Links to Strategy and Performance	p. 101
Future Research on Functional Experiences	p. 104
Formal Education	p. 106
International Experience	p. 112
Future Directions	p. 113
Promising Avenues of Research	p. 114
A Still-Untapped Perspective: The Factors Affecting the Predictive Strength of Executive Characteristics	p. 116
Which Traits?	p. 117
Which Behaviors?	p. 118
Which People?	p. 119
Which Situations?	p. 119
Conclusion	p. 120
Top Management Teams	p. 121
The Conceptual Elements of Top Management Teams	p. 123
How the Conceptual Elements of TMTs Are Related	p. 125
Teams versus Groups	p. 126
Who Is in the Top Group?	p. 127
Power Dynamics at the Top	p. 128
Interactions within TMTs	p. 131
The CEO and Team Process	p. 137
Determinants of TMT Characteristics	p. 138
Environment	p. 138
Organization	p. 142
CEO	p. 148
Consequences of TMTs' Interaction	p. 152
Consequences of TMTs on Strategic Decision Making	p. 152
Consequences of TMTs on Strategy	p. 154
Consequences of TMTs on Firm Performance	p. 158
Conclusion	p. 162
Changes at the Top: The Antecedents of Executive Turnover and Succession	p. 164
Will Succession Occur? Determinants of Top Executive Departure	p. 166
Organizational Performance	p. 168
Agency Conditions	p. 171
Other Organizational Characteristics	p. 174
Environment	p. 176
Predecessor (Incumbent) Characteristics	p. 178
What Will Be the Dynamics of the Succession Process?	p. 179
Types of Successions	p. 179
Influence of the Incumbent versus the Board	p. 183
Who Will Be Selected?	p. 185
Insider versus Outsider Selection	p. 186
The Broader Case of Continuity versus Change	p. 194
Conclusion	p. 196
Changes at the Top: The Consequences of Executive Turnover and Succession	p. 198
What Are the Consequences of Succession?	p. 199
The New Executive's Behaviors and Organizational Change	p. 200
Implications for Organizational Performance	p. 204
Executive Turnover: Beyond the CEO	p. 213
Other Interesting Issues for Succession	p. 224
Conclusion	p. 225
Understanding Board Structure, Composition, and Vigilance	p. 227
Determinants of Board Structure and Composition	p. 229
What Do We Mean by Board Structure and Composition?	p. 229
Critical Contingencies	p. 232
Institutional Forces	p. 234
Agency Conditions	p. 238
Determinants of Board Vigilance	p. 243
Board Vigilance in Monitoring and Disciplining Top Management	p. 243
Competition versus Cooperation in Board-CEO Relations	p. 251
Conclusion	p. 253
The Consequences of Board Involvement and Vigilance	p. 255
Board Involvement in Strategy Formation	p. 255
Contextual Conditions Predicting Board Strategic Involvement	p. 263
Boards and Firm Performance	p. 269
Board Effects on Strategy	p. 270
Boards as Supra-Top Management Teams	p. 277
Board Monitoring and Disciplinary Behavior	p. 281
Boards and Executive Compensation	p. 282
Boards and Monitoring Behaviors	p. 284
Conclusion	p. 289
The Determinants of Executive Compensation	p. 291
Organizing Dimensions for a Framework of Executive Compensation	p. 291
Direction of Causality	p. 291
Theoretical Perspectives	p. 292
Unit of Analysis	p. 293
Economic Explanations for Executive Compensation	p. 295
Research from the Managerialist and Neoclassical Traditions	p. 295
Moderators of the Pay-Performance Relationship	p. 296
Human Capital	p. 305
Marginal Product and the Managerial Labor Market	p. 309
Social Explanations for Executive Compensation	p. 310
Ismorphism of Executive Compensation	p. 312
Social Comparison Processes in the Setting of Executive Pay	p. 315
Social Capital	p. 318
Political Explanations for Executive Compensation	p. 320
Compensation for Business Unit General Managers: Determinants and Consequences	p. 324
GM Compensation versus CEO Compensation	p. 324
The Determinants of GM Compensation	p. 325
The Consequences of GM Compensation	p. 327
Conclusion	p. 328
Executive Compensation: Consequences and Distributions	p. 330
Consequences of Executive Compensation	p. 330
Economic Explanations for the Consequences of Executive Compensation	p. 331
Behavioral Agency Theory	p. 337
Social Explanations for the Consequences of Executive Compensation	p. 344
Political Explanations for the Consequences of Executive Compensation	p. 346
Distribution of Compensation within Top Management Teams	p. 348
Pay Differential between CEOs and Other Executives in the Firm	p. 348
Pay Dispersion within Top Management Teams	p. 356
TMT and CEO Compensation Patterns	p. 361
Conclusion	p. 364
Notes	p. 367
References	p. 383
Index	p. 451
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