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

Maria Guadalupe (), Hongyi Li and Julie Wulf

No 17846, NBER Working Papers from National Bureau of Economic Research, Inc

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."

JEL-codes: D22 J31 L2 M12 M5 (search for similar items in EconPapers)
Date: 2012-02
New Economics Papers: this item is included in nep-bec
Note: CF LS PR
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Citations: View citations in EconPapers (8)

Published as Maria Guadalupe & Hongyi Li & Julie Wulf, 2014. "Who Lives in the C-Suite? Organizational Structure and the Division of Labor in Top Management," Management Science, vol 60(4), pages 824-844.

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Journal Article: Who Lives in the C-Suite? Organizational Structure and the Division of Labor in Top Management (2014)
Working Paper: Who Lives in the C-Suite? Organizational Structure and the Division of Labor in Top Management (2012)
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