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How Do CEOs Make Strategy?

Author

Listed:
  • Mu-Jeung Yang
  • Michael Christensen
  • Nicholas Bloom
  • Raffaella Sadun
  • Jan Rivkin

Abstract

We explore the critical question of how executives make strategic decisions. Utilizing a new survey of 262 CEO alumni of Harvard Business School, we gather evidence on four aspects of each executive’s business strategy: its overall structure, its formalization, its development, and its implementation. We report three key results. First, different CEOs use markedly different processes to make strategic decisions; some follow highly formalized, rigorous, and deliberate processes, while others rely heavily on instinct and intuition. Second, more structured strategy processes are associated with larger firm size and faster employment growth. Third, using a regression discontinuity centered around a change in the curriculum of Harvard Business School’s required strategy course, we trace differences in strategic decision making back to differences in managerial education.

Suggested Citation

  • Mu-Jeung Yang & Michael Christensen & Nicholas Bloom & Raffaella Sadun & Jan Rivkin, 2020. "How Do CEOs Make Strategy?," NBER Working Papers 27952, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:27952
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    Cited by:

    1. Coali, Andrea & Gambardella, Alfonso & Novelli, Elena, 2024. "Scientific decision-making, project selection and longer-term outcomes," Research Policy, Elsevier, vol. 53(6).

    More about this item

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics

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