IDEAS home Printed from https://ideas.repec.org/a/eee/jbrese/v68y2015i11p2338-2346.html
   My bibliography  Save this article

CEO influences on firms' strategic actions: A comparison of CEO-, firm-, and industry-level effects

Author

Listed:
  • Zacharias, Nicolas A.
  • Six, Bjoern
  • Schiereck, Dirk
  • Stock, Ruth Maria

Abstract

This study investigates the importance of CEO-level effects for firms' strategic actions, compared with the impact of firm- and industry-level effects. Strategic actions reflect the firm's competitive initiatives and choices regarding financial issues and resource allocation. Drawing on strategic leadership theories, the resource-based view, industrial organization economics, and the reconciling approach of managerial discretion, this study proposes that the CEO's influence varies across different categories of strategic actions. By applying a variance decomposition approach to a 20-year sample of 110 firms in 10 industries, the authors reveal that for competitive initiatives, CEO-level effects are associated with the largest amount of variance, together with firm-level effects. Contrary to expectations, firm-level effects are most relevant for financial choices, followed by CEO effects. Resource allocation depends mainly on firm-level effects, rather than on CEO- or industry-level effects.

Suggested Citation

  • Zacharias, Nicolas A. & Six, Bjoern & Schiereck, Dirk & Stock, Ruth Maria, 2015. "CEO influences on firms' strategic actions: A comparison of CEO-, firm-, and industry-level effects," Journal of Business Research, Elsevier, vol. 68(11), pages 2338-2346.
    • Handle: RePEc:eee:jbrese:v:68:y:2015:i:11:p:2338-2346
    DOI: 10.1016/j.jbusres.2015.03.045
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0148296315001630
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jbusres.2015.03.045?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Scott L. Newbert, 2007. "Empirical research on the resource‐based view of the firm: an assessment and suggestions for future research," Strategic Management Journal, Wiley Blackwell, vol. 28(2), pages 121-146, February.
    2. Malmendier, Ulrike & Tate, Geoffrey, 2008. "Who makes acquisitions? CEO overconfidence and the market's reaction," Journal of Financial Economics, Elsevier, vol. 89(1), pages 20-43, July.
    3. Anita M. McGahan & Michael E. Porter, 2002. "What Do We Know About Variance in Accounting Profitability?," Management Science, INFORMS, vol. 48(7), pages 834-851, July.
    4. Thomas H. Brush & Philip Bromiley & Margaretha Hendrickx, 1999. "The relative influence of industry and corporation on business segment performance: an alternative estimate," Strategic Management Journal, Wiley Blackwell, vol. 20(6), pages 519-547, June.
    5. Craig Crossland & Donald C. Hambrick, 2007. "How national systems differ in their constraints on corporate executives: a study of CEO effects in three countries," Strategic Management Journal, Wiley Blackwell, vol. 28(8), pages 767-789, August.
    6. Wei‐Ru Chen & Kent D. Miller, 2007. "Situational and institutional determinants of firms' R&D search intensity," Strategic Management Journal, Wiley Blackwell, vol. 28(4), pages 369-381, April.
    7. Marianne Bertrand & Antoinette Schoar, 2003. "Managing with Style: The Effect of Managers on Firm Policies," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(4), pages 1169-1208.
    8. Kathleen M. Eisenhardt & Claudia Bird Schoonhoven, 1996. "Resource-based View of Strategic Alliance Formation: Strategic and Social Effects in Entrepreneurial Firms," Organization Science, INFORMS, vol. 7(2), pages 136-150, April.
    9. Mariadoss, Babu John & Johnson, Jean L. & Martin, Kelly D., 2014. "Strategic intent and performance: The role of resource allocation decisions," Journal of Business Research, Elsevier, vol. 67(11), pages 2393-2402.
    10. Sucheta Nadkarni & Pamela S. Barr, 2008. "Environmental context, managerial cognition, and strategic action: an integrated view," Strategic Management Journal, Wiley Blackwell, vol. 29(13), pages 1395-1427, December.
    11. Danny Miller & Jean-Marie Toulouse, 1986. "Chief Executive Personality and Corporate Strategy and Structure in Small Firms," Management Science, INFORMS, vol. 32(11), pages 1389-1409, November.
    12. Richard P. Rumelt & Dan Schendel & David J. Teece, 1991. "Strategic management and economics," Strategic Management Journal, Wiley Blackwell, vol. 12(S2), pages 5-29, December.
    13. ANITA M. McGAHAN & MICHAEL E. PORTER, 1997. "How Much Does Industry Matter, Really?," Strategic Management Journal, Wiley Blackwell, vol. 18(S1), pages 15-30, July.
    14. Jeremy J. Marcel, 2009. "Why top management team characteristics matter when employing a chief operating officer: a strategic contingency perspective," Strategic Management Journal, Wiley Blackwell, vol. 30(6), pages 647-658, June.
    15. Scott L. Newbert, 2008. "Value, rareness, competitive advantage, and performance: a conceptual‐level empirical investigation of the resource‐based view of the firm," Strategic Management Journal, Wiley Blackwell, vol. 29(7), pages 745-768, July.
    16. Giovanni. Gavetti & Daniel A. Levinthal, 2004. "50th Anniversay Article: The Strategy Field from the Perspective of Management Science: Divergent Strands and Possible Integration," Management Science, INFORMS, vol. 50(10), pages 1309-1318, October.
    17. Bruno Cassiman & Reinhilde Veugelers, 2006. "In Search of Complementarity in Innovation Strategy: Internal R& D and External Knowledge Acquisition," Management Science, INFORMS, vol. 52(1), pages 68-82, January.
    18. Edward H. Bowman & Constance E. Helfat, 2001. "Does corporate strategy matter?," Strategic Management Journal, Wiley Blackwell, vol. 22(1), pages 1-23, January.
    19. Waldron, Theodore L. & Graffin, Scott D. & Porac, Joseph F. & Wade, James B., 2013. "Third-party endorsements of CEO quality, managerial discretion, and stakeholder reactions," Journal of Business Research, Elsevier, vol. 66(12), pages 2592-2599.
    20. Gabriel Hawawini & Venkat Subramanian & Paul Verdin, 2003. "Is performance driven by industry‐or firm‐specific factors? A new look at the evidence," Strategic Management Journal, Wiley Blackwell, vol. 24(1), pages 1-16, January.
    21. Edward Zajac, 1995. "SMJ 1994 best paper prize to Birger Wernerfelt," Strategic Management Journal, Wiley Blackwell, vol. 16(3), pages 169-170.
    22. Smith, Anne & Houghton, Susan M. & Hood, Jacqueline N. & Ryman, Joel A., 2006. "Power relationships among top managers: Does top management team power distribution matter for organizational performance?," Journal of Business Research, Elsevier, vol. 59(5), pages 622-629, May.
    23. Finney, R. Zachary & Campbell, Noel D. & Powell, C. Michael, 2005. "Strategies and resources: Pathways to success?," Journal of Business Research, Elsevier, vol. 58(12), pages 1721-1729, December.
    24. Agrawal, Anup & Jaffe, Jeffrey F & Mandelker, Gershon N, 1992. "The Post-merger Performance of Acquiring Firms: A Re-examination of an Anomaly," Journal of Finance, American Finance Association, vol. 47(4), pages 1605-1621, September.
    25. Mason A. Carpenter & Brian R. Golden, 1997. "Perceived Managerial Discretion: A Study Of Cause And Effect," Strategic Management Journal, Wiley Blackwell, vol. 18(3), pages 187-206, March.
    26. Leenders, Mark A.A.M. & Wierenga, Berend, 2008. "The effect of the marketing–R&D interface on new product performance: The critical role of resources and scope," International Journal of Research in Marketing, Elsevier, vol. 25(1), pages 56-68.
    27. Alison Mackey, 2008. "The effect of CEOs on firm performance," Strategic Management Journal, Wiley Blackwell, vol. 29(12), pages 1357-1367, December.
    28. Schmalensee, Richard, 1985. "Do Markets Differ Much?," American Economic Review, American Economic Association, vol. 75(3), pages 341-351, June.
    29. Richard P. Rumelt, 1991. "How much does industry matter?," Strategic Management Journal, Wiley Blackwell, vol. 12(3), pages 167-185, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Guan, Jian & Gao, Zhimin & Tan, Justin & Sun, Weizheng & Shi, Fan, 2021. "Does the mixed ownership reform work? Influence of board chair on performance of state-owned enterprises," Journal of Business Research, Elsevier, vol. 122(C), pages 51-59.
    2. Chen, Fu Chen & Indiran, Logaiswari Indiran & Abdul Kohar, Umar Haiyat Abdul Kohar, 2023. "Disruptive Innovation (DI) and Chief Executive Officer(CEO): A synthetic literature review," MPRA Paper 119321, University Library of Munich, Germany, revised 26 Oct 2023.
    3. Mun, Seongjae & Han, Seung Hun & Seo, Dongwook, 2020. "The impact of CEO educational background on corporate cash holdings and value of excess cash," Pacific-Basin Finance Journal, Elsevier, vol. 61(C).
    4. Fernandes, Cristina I. & Veiga, Pedro M. & Ferreira, João J. & Rammal, Hussain G. & Pereira, Vijay, 2022. "Assessing strategic leadership in organizations: Using bibliometric data to develop a holistic model," Journal of Business Research, Elsevier, vol. 141(C), pages 646-655.
    5. Bart S. Vanneste, 2017. "How Much Do Industry, Corporation, and Business Matter, Really? A Meta-Analysis," Strategy Science, INFORMS, vol. 2(2), pages 121-139, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Markus A. Fitza, 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, Wiley Blackwell, vol. 35(12), pages 1839-1852, December.
    2. Dmitry Sharapov & Paul Kattuman & Diego Rodriguez & F. Javier Velazquez, 2021. "Using the SHAPLEY value approach to variance decomposition in strategy research: Diversification, internationalization, and corporate group effects on affiliate profitability," Strategic Management Journal, Wiley Blackwell, vol. 42(3), pages 608-623, March.
    3. Philipp Meyer‐Doyle & Sunkee Lee & Constance E. Helfat, 2019. "Disentangling the microfoundations of acquisition behavior and performance," Strategic Management Journal, Wiley Blackwell, vol. 40(11), pages 1733-1756, November.
    4. Tobias Keller & Martin Glaum & Andreas Bausch & Thorsten Bunz, 2023. "The “CEO in context” technique revisited: A replication and extension of Hambrick and Quigley (2014)," Strategic Management Journal, Wiley Blackwell, vol. 44(4), pages 1111-1138, April.
    5. Sarada Devi Gadepalli & Arindam Mondal, 2018. "Sources of Business Unit Performance Heterogeneity in India: The Influence of Ownership," Vikalpa: The Journal for Decision Makers, , vol. 43(4), pages 207-221, December.
    6. Pankaj Kumar & Xiaojin Liu & Akbar Zaheer, 2022. "How much does the firm's alliance network matter?," Strategic Management Journal, Wiley Blackwell, vol. 43(8), pages 1433-1468, August.
    7. Chen, Yi-Min, 2010. "The continuing debate on firm performance: A multilevel approach to the IT sectors of Taiwan and South Korea," Journal of Business Research, Elsevier, vol. 63(5), pages 471-478, May.
    8. Bart S. Vanneste, 2017. "How Much Do Industry, Corporation, and Business Matter, Really? A Meta-Analysis," Strategy Science, INFORMS, vol. 2(2), pages 121-139, June.
    9. Yi-Min Chen, 2008. "How Much Does Country Matter?," International Regional Science Review, , vol. 31(4), pages 404-435, October.
    10. Gianpaolo Abatecola & Matteo Cristofaro, 2019. "Ingredients of Sustainable CEO Behaviour: Theory and Practice," Sustainability, MDPI, vol. 11(7), pages 1-15, April.
    11. Luiz Claudio Louzada & Márcio Augusto Gonçalves, 2018. "The Moderating Effect of the Sector’s Level of Concentration on the Relationship Between Balance Sheet Composition and the Firm’s Competitive Advantage," Brazilian Business Review, Fucape Business School, vol. 15(6), pages 512-532, November.
    12. Muhammad Azeem Qureshi & Fred H. Strønen & Marius Tyseng & Marius Urdal, 2020. "Sustainable Business in Norway: The Firm or the Industry Effect?," Sustainability, MDPI, vol. 12(8), pages 1-13, April.
    13. K. O’Shaughnessy & Eric Gedajlovic & Patrick Reinmoeller, 2007. "The influence of firm, industry and network on the corporate social performance of Japanese firms," Asia Pacific Journal of Management, Springer, vol. 24(3), pages 283-303, September.
    14. Spyridon Stavropoulos & Martijn J. Burger & Dimitris Skuras, 2015. "Data Sparseness and Variance in Accounting Profitability," Tinbergen Institute Discussion Papers 15-014/VII, Tinbergen Institute.
    15. Kohls, Tobias & Mager, Ferdinand & Regele, Tobias, 2023. "Competitive advantage and firm, industry, and country effects: An asset pricing perspective," Journal of Economics and Business, Elsevier, vol. 127(C).
    16. Ketelhöhn, Niels W. & Quintanilla, Carlos, 2012. "Country effects on profitability: A multilevel approach using a sample of Central American firms," Journal of Business Research, Elsevier, vol. 65(12), pages 1767-1772.
    17. Jan Schiefer & Stefan Hirsch & Monika Hartmann & Adelina Gschwandtner, 2013. "Industry, firm, year and country effects on profitability in EU food processing," Studies in Economics 1309, School of Economics, University of Kent.
    18. Markus Fitza & Laszlo Tihanyi, 2017. "How Much Does Ownership Form Matter?," Strategic Management Journal, Wiley Blackwell, vol. 38(13), pages 2726-2743, December.
    19. Francesco Castellaneta & Oliver Gottschalg, 2016. "Does ownership matter in private equity? The sources of variance in buyouts' performance," Strategic Management Journal, Wiley Blackwell, vol. 37(2), pages 330-348, February.
    20. Goddard, John & Tavakoli, Manouche & Wilson, John O.S., 2009. "Sources of variation in firm profitability and growth," Journal of Business Research, Elsevier, vol. 62(4), pages 495-508, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbrese:v:68:y:2015:i:11:p:2338-2346. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jbusres .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.