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Who Lives in the C-Suite? Organizational Structure and the Division of Labor in Top Management

Maria Guadalupe (), Hongyi Li and Julie M. Wulf ()
Additional contact information
Julie M. Wulf: Harvard Business School

No 6635, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This 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."

Keywords: communication; organizational design; functions; centralization; M-form; hierarchy; top management team; information technology; activities; diversification (search for similar items in EconPapers)
JEL-codes: D22 J24 J33 L25 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2012-06
New Economics Papers: this item is included in nep-bec
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Related works:
Journal Article: Who Lives in the C-Suite? Organizational Structure and the Division of Labor in Top Management (2014) Downloads
Working Paper: Who Lives in the C-Suite? Organizational Structure and the Division of Labor in Top Management (2012) Downloads
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