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Leadership structure and firm performance: evidence from China

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  • Mengran Duan
  • Tianyi Dong

Abstract

This study compares the unity-of-command principle with the shared-command principle based on China’s unique institutional background. Our findings show firms with higher power gap between chairman and CEO exhibit better performance, implying the unity-of-command principle is more effective for most organizations. However, the empirical results also show there is an optimal value for the power gap, as it becomes harmful for the firm performance after exceeding the threshold value. The results remain consistent after solving the endogeneity problem. Overall, our findings provide solid evidence for the debate on the unity-of-command principle and the shared-command principle.

Suggested Citation

  • Mengran Duan & Tianyi Dong, 2024. "Leadership structure and firm performance: evidence from China," Applied Economics Letters, Taylor & Francis Journals, vol. 31(4), pages 300-306, February.
    • Handle: RePEc:taf:apeclt:v:31:y:2024:i:4:p:300-306
    DOI: 10.1080/13504851.2022.2132203
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