Who Lives in the C-Suite? Organizational Structure and the Division of Labor in Top Management
AbstractThis paper shows that top management structures in large US firms radically changed since the mid-1980s. While the number of managers reporting directly to the CEO doubled, the growth was driven primarily by functional managers rather than general managers. Using panel data on senior management positions, we explore the relationship between changes in executive team composition, firm diversification, and IT investments – which arguably alter returns to exploiting synergies through corporate-wide coordination by functional managers in headquarters. We find that the number of functional managers closer to the product ("product" functions i.e., marketing, R&D) increase as firms focus their businesses, while the number of functional managers farther from the product ("administrative" functions i.e., finance, law, HR) increase with IT investments. Finally, we show that general manager pay decreases as functional managers join the executive team suggesting a shift in activities from general to functional managers – a phenomenon we term "functional centralization."
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6635.
Length: 35 pages
Date of creation: Jun 2012
Date of revision:
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Other versions of this item:
- Maria Guadalupe & Hongyi Li & Julie Wulf, 2012. "Who Lives in the C-Suite? Organizational Structure and the Division of Labor in Top Management," NBER Working Papers 17846, National Bureau of Economic Research, Inc.
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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"Language and the Theory of the Firm,"
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CEP Discussion Papers
dp0927, Centre for Economic Performance, LSE.
- Nick Bloom & Luis Garicano & Raffaella Sadun & John Van Reenen, 2009. "The distinct effects of information technology and communication technology on firm organization," LSE Research Online Documents on Economics 25477, London School of Economics and Political Science, LSE Library.
- Nicholas Bloom & Luis Garicano & Raffaella Sadun & John Van Reenen, 2009. "The distinct effects of Information Technology and Communication Technology on firm organization," NBER Working Papers 14975, National Bureau of Economic Research, Inc.
- Alfred D. Chandler, 1969. "Strategy and Structure: Chapters in the History of the American Industrial Enterprise," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262530090, January.
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