Research Notes and Commentaries
The effect of CEOs on firm performance
Article first published online: 30 OCT 2008
Copyright © 2008 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 29, Issue 12, pages 1357–1367, December 2008
How to Cite
Mackey, A. (2008), The effect of CEOs on firm performance. Strat. Mgmt. J., 29: 1357–1367. doi: 10.1002/smj.708
- Issue published online: 30 OCT 2008
- Article first published online: 30 OCT 2008
- Manuscript Revised: 29 MAY 2008
- Manuscript Received: 19 SEP 2007
- executive leadership;
- firm performance;
- leadership, variance decomposition;
The extent to which CEOs influence firm performance is fundamental to scholarly understanding of how organizations work; yet, this linkage is poorly understood. Previous empirical efforts to examine the link between CEOs and firm performance using variance decomposition, while provocative, nevertheless suffer from methodological problems that systematically understate the relative impact of CEOs on firm performance compared to industry and firm effects. This study addresses these methodological problems and reexamines the percentage of the variance in firm performance explained by heterogeneity in CEOs. The results of this study suggest that in certain settings the ‘CEO effect’ on corporate-parent performance is substantially more important than that of industry and firm effects, but only moderately more important than industry and firm effects on business-segment performance. Copyright © 2008 John Wiley & Sons, Ltd.