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

39 Pages Posted: 11 Jan 2012 Last revised: 18 Jun 2013

See all articles by Maria Guadalupe

Maria Guadalupe

INSEAD - Economics and Political Sciences; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Hongyi Li

UNSW Australia Business School, School of Economics

Julie Wulf

Harvard Business School

Multiple version iconThere are 4 versions of this paper

Date Written: June 18, 2013

Abstract

Top management structures in large US firms have changed significantly since the mid-1980s. While the size of the executive team — the group of managers reporting directly to the CEO — doubled during this period, this growth was driven primarily by an increase in functional managers rather than general managers, a phenomenon we term “functional centralization.” Using panel data on senior management positions, we show that changes in the structure of the executive team are tightly linked to changes in firm diversification and IT investments. These relationships depend crucially on the function involved: those closer to the product (“product” functions, e.g. marketing/R&D) behave differently from functions further from the product (“administrative” functions, e.g. finance/law/HR). We argue that this distinction is driven by differences in the information-processing activities associated with each function, and apply this insight to refine and extend existing theories of centralization. We also discuss the implications of our results for organizational forms beyond the executive team.

Keywords: communication, organizational design, functions, centralization, M-form, hierarchy, top management team, C-Suite, information technology, activities, diversification

Suggested Citation

Guadalupe, Maria and Li, Hongyi and Wulf, Julie M., Who Lives in the C-Suite? Organizational Structure and the Division of Labor in Top Management (June 18, 2013). Management Science, Forthcoming; Harvard Business School Strategy Unit Working Paper No. 12-059. Available at SSRN: https://ssrn.com/abstract=1982531 or http://dx.doi.org/10.2139/ssrn.1982531

Maria Guadalupe

INSEAD - Economics and Political Sciences ( email )

Boulevard de Constance
F-77305 Fontainebleau Cedex
France

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Hongyi Li

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia

Julie M. Wulf (Contact Author)

Harvard Business School ( email )

Harvard Business School
Boston, MA
United States

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