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 National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17846.
Date of creation: Feb 2012
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Other versions of this item:
- Guadalupe, Maria & Li, Hongyi & Wulf, Julie M., 2012. "Who Lives in the C-Suite? Organizational Structure and the Division of Labor in Top Management," IZA Discussion Papers 6635, Institute for the Study of Labor (IZA).
- D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
- M12 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Personnel Management; Executives; Executive Compensation
- M5 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics
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