How Do CEOS Make Strategy?

54 Pages Posted: 19 Oct 2020 Last revised: 17 May 2021

See all articles by Mu-Jeung Yang

Mu-Jeung Yang

David Eccles School of Business, University of Utah

Michael Christensen

Harvard Business School

Nicholas Bloom

Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Raffaella Sadun

Harvard University - Strategy Unit; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Jan W. Rivkin

Harvard Business School, Strategy Unit

Date Written: October 2020

Abstract

We explore the critical question of how executives make strategic decisions. Utilizing a new survey of 262 CEO alumni of Harvard Business School, we gather evidence on four aspects of each executive’s business strategy: its overall structure, its formalization, its development, and its implementation. We report three key results. First, different CEOs use markedly different processes to make strategic decisions; some follow highly formalized, rigorous, and deliberate processes, while others rely heavily on instinct and intuition. Second, more structured strategy processes are associated with larger firm size and faster employment growth. Third, using a regression discontinuity centered around a change in the curriculum of Harvard Business School’s required strategy course, we trace differences in strategic decision making back to differences in managerial education.

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Suggested Citation

Yang, Mu-Jeung and Christensen, Michael and Bloom, Nicholas and Sadun, Raffaella and Rivkin, Jan, How Do CEOS Make Strategy? (October 2020). NBER Working Paper No. w27952, Available at SSRN: https://ssrn.com/abstract=3714444

Mu-Jeung Yang (Contact Author)

David Eccles School of Business, University of Utah

Michael Christensen

Harvard Business School ( email )

Boston, MA 02163
United States

Nicholas Bloom

Stanford University - Department of Economics ( email )

Landau Economics Building, Room 231
579 Serra Mall
Stanford, CA 94305-6072
United States
650-725-7836 (Phone)

HOME PAGE: http://economics.stanford.edu/faculty/bloom

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Raffaella Sadun

Harvard University - Strategy Unit ( email )

Harvard Business School
Soldiers Field Road
Boston, 02163
United States

HOME PAGE: http://people.hbs.edu/rsadun

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

HOME PAGE: http://cep.lse.ac.uk/_new/staff/person.asp?id=1758

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Jan Rivkin

Harvard Business School, Strategy Unit ( email )

Harvard Business School
Soldiers Field Road
Boston, MA 02163
United States
617-495-6690 (Phone)
617-495-0355 (Fax)

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