Marvin Bower Professor of Leadership Development
Rakesh Khurana is the Marvin Bower Professor of Leadership Development at the Harvard Business School. He is also the Master of Cabot House at Harvard College. He teaches a doctoral seminar on Management and Markets and and MBA courses in corporate governance and leadership. He is the course head for the first year MBA leadership and organizational behavior course.
Professor Khurana received his B.S. from Cornell University in Ithaca, New York and his A.M. (Sociology) and Ph.D. in Organization Behavior from Harvard University. Prior to attending graduate school, he worked as a founding member of Cambridge Technology Partners in Sales and Marketing.
Professor Khurana's research uses a sociological perspective to focus on the processes by which elites and leaders are selected and developed. He has written extensively about the CEO labor market with a particular interest on: the factors that lead to vacancies in the CEO position; the factors that affect the choice of successor; the role of market intermediaries such as executive search firms in CEO search; and the consequences of CEO succession and selection decisions for subsequent firm performance and strategic choices. He has published articles on Corp. Governance in the Harvard Business and Sloan Management Review. His book on the CEO labor market, Searching for a Corporate Savior: The Irrational Quest for Charismatic CEOs (Princeton University Press). The book is an analysis of the labor market for CEOs.
In the book Khurana explains the basic mechanics of the market, how it differs from other labor markets, how it has changed in the past twenty years, and whether it is successful in placing the best candidates in the available jobs. He focuses on the growing tendency of boards of directors to ignore candidates inside their firms and to hire CEOs from outside. He seeks to show that this trend has emerged not because of the intrinsic merits of the “external market,” but because of the rise of investor capitalism and despite evidence that reliance on this market for CEO succession and executive compensation has serious problems that may threaten the viability of firms and the legitimacy of market capitalism.
Khurana's subsequent research grows out of the same interests in the social context of business leadership and the allocation of leadership positions that motivated his research on the CEO labor market. His 2008 book, From Higher Aims to Hired Hands: The Social Transformation of American Business Schools and the Unfulfilled Promise of Management as a Profession (2007: Princeton University Press), chronicles the evolution of management as a profession, with particular focus on the institutional development of the MBA. The focus of this book lies in its direct bearing on the question of how professional management has claimed and received legitimation for its role as the steward of a very substantial proportion of society’s material wealth and resources—a role that has itself been subject to changing interpretations over the decades since the phenomenon of professional management first appeared on the American scene. Guiding questions in this research stream include: Where did our current shareholder-centered, agency-based view of the role of professional management come from—particularly in light of the very different one that underlay the founding of the first professional business schools and the granting to them of a place within the university? How does our current view of the role of the professional manager compare with the way that professional responsibility has traditionally been conceived in the other professions? In view of the way that professional roles have recently been evolving in professions such as law or medicine, do market forces inevitably undermine professional autonomy and standards? What would be the potential benefits and drawbacks of management becoming more like the other professions in its structure and culture than it has been during its history to date? Khurana's work argues that without a re-commitment to the professionalization project, business schools risk devolving into narrow vocation schools and serving largely as a credentialing system, ultimately weakening the legitimacy of MBA programs and contributing to a business culture that garners low trust and low legitimacy in society.
From Higher Aims to Hired Hands received the American Sociological Association's Max Weber Book Award in 2008 for most outstanding contribution to scholarship in the past two years. In 2007, the book was also the Winner of the 2007 Best Professional/Scholarly Publishing Book in Business, Finance and Management, Association of American Publishers.
Khurana has also been working with Dean Nitin Nohria to help legitimate the study of leadership as a multi-disciplinary field. Despite the fact that most business schools have "leadership" in their mission, the field is not regarded as a legitimate field of academic study. Khurana and Nohria have co-edited The Handbook of Leadership Theory and Practice, a volume aimed at advancing leadership studies as an academic field of study and scholarship that was published by Harvard Business Press in 2010 and the Handbook of Leadership Teaching and Pedagogy (with Snook and Nohria).
The Handbook of Leadership Teaching and Pedagogy received the 2010 Outstanding Leadership Book award by the University of San Diego and the International Leadership Association.
Khurana, Nitin Nohria, and Scott Snook are also co-editors of the forthcoming Handbook of Leadership Teaching and Pedagogy, a volume aimed at examining the pedagogical approaches and theories that undergird existing leadership development and training. The volume will be published by Sage Publications in 2011. Khurana, Nohria and Snook are also co-organizing the fourth annual Harvard Leadership Forum that will focus on developing course modules that integrate the teaching of values in standard organizational behavior and leadership courses.
Khurana is now working on a new research project examining global leadership and the culture, systems, and organizations that support transnational networks of institutional leadership.
Khurana's work on the deficiencies of the CEO labor market and his research on business education is regularly featured by the general media such as: Business Week, Fortune, The Wall Street Journal, The New York Times, Newsweek, The Washington Post, CNBC, The Economist, Globe and Mail, The New Yorker, Chief Executive and Corporate Board Member magazine. He has also published opinion-editorials in some of these outlets. He has consulted to corporations and executive search firms to help improve their CEO succession, governance, and executive development practices. He has been recognized by the London Times as one of 'The Thinkers 50', a list of the fifty most influential management thinkers in the world.
Interested in book reviews and everyday observations, visit Rakesh's weblog at rakeshkhurana.typepad.com. Interested in signing the MBA Oath which aims to help move management toward seeing itself as a profession see mbaoath.org. Interested in helping develop a set of global standards that will allow for broad, inclusive and sustainable value creation by firms visit www.globalbusinessoath.org
In his role as a professor, Khurana does ocassionally receive payment for executive education (HBS projects and external projects) and consulting projects related to leadership and governance issues. He is a member of the board of the MBA Oath Project. He is also on the board of American Family Insurance. When these activities are directly related to the collection of data or the development of cases, they will be noted on any material published or revised after 2010. Beginning in 2011 and then updated annually, he will list all firms he has received compensation for in excess of $5,000.
I am trained in organizational sociology and my main areas of interest lie in macro-organizational theory and the dynamics of executive labor markets. To date, my research has focused on two themes. The first revolves around understanding the forces that govern the processes of chief executive officer (CEO) change in large, publicly-held corporations. I pursue research in this area primarily by combining the flexibility of network theory with a deep field-based understanding of the phenomenon. I consider myself part of a growing group of scholars who employ the network perspective and field-based knowledge to re-frame classical economic and sociological explanations of organizational decisions and market outcomes. This approach holds out the promise of a more empirically grounded model of organizational action and a conception that many organizational actions, usually thought to be primarily responsive to objective economic factors such as firm performance and incentives, are also responsive to a variety of social factors including position in a social structure. I view this approach to be a vital infusion of sociological imagination into theoretical territory and empirical settings that have suffered by its absence.
The research I have conducted on the CEO labor market has focused on four interrelated processes in this area: the factors that lead to vacancies in the CEO position; factors that affect the choice of successor; the role of market intermediaries such as executive search firms in CEO search; and the consequences of CEO succession and selection decisions for subsequent firm performance and strategic choices.
My current research plans grow out of the same interests in the social context of business leadership and the allocation of leadership positions that have motivated my research on the CEO labor market. My first set of projects focus on the 'managerial' implications of my research on the CEO labor market. Here, I am developing cases, articles, and essays about CEO succession and the problems of existence governance institutions that will be published in more managerially-oriented outlets.
The second major subject that I am now beginning to study is the evolution of management as a profession. My thoughts on this topic are rooted in the question of how certain occupations within business (not just executive management but also consulting, private equity, and investment banking) have come to require the MBA credential as a prerequisite for entry. The significance of this issue lies in its direct bearing on the question of how professional management has claimed and received legitimation for its role as the steward of a very substantial proportion of society’s material wealth and resources—a role that has itself been subject to changing interpretations over the decades since the phenomenon of professional management first appeared on the American scene.
Although there is a rich sociological literature on professions, it is focused, for the most part, on licensed professions such as medicine and law. This literature argues that professions are occupational groups that claim jurisdiction over particular arenas of work. In order to claim jurisdiction, a profession must ask “society to recognize its cognitive structure through exclusive rights” (Abbott, 1988: 59). Scholars studying professions argue that societal recognition of such claims, which is what results in the granting of professional status and privileges, is usually achieved either through the legal system or in the realm of public opinion. Law and medicine are professions that rely on the legal system (i.e., state licensing boards). Journalism and social work are examples of professions that are more dependent on public opinion for their ability to monopolize particular types of work. In this context, professional management is unique in that it has relied on neither legal authority for, nor public endorsement of, its claims of jurisdiction over managerial tasks in large publicly held corporations, investment banks, and so forth. Instead—according to my working hypothesis—its jurisdictional authority has been achieved through an interdependent relationship between university-based business schools (which derive a certain measure of their own legitimacy from the university itself, an institution that other American professions have in effect licensed to provide training and credentialing for aspiring professionals) and the corporate workplace. I intend to test this hypothesis by exploring the history of professional business education and the development of particular business occupations that have arisen and evolved in tandem with the university-based business schools.
I expect the results of my research on professions to have implications for our understanding of how, exactly, professional managers do, can, or should “contribute to the well-being of society”. Relevant questions that I hope to answer include: Where did our current shareholder-centered, agency-based view of the role of professional management come from—particularly in light of the very different one that underlay the founding of the first professional business schools and the granting to them of a place within the university? How does our current view of the role of the professional manager compare with the way that professional responsibility has traditionally been conceived in the other professions? In view of the way that professional roles have recently been evolving in professions such as law or medicine, do market forces inevitably undermine professional autonomy and standards? What would be the potential benefits and drawbacks of management becoming more like the other professions in its structure and culture than it has been during its history to date?
Nitin Nohria and I have been writing about making management a profession. HBS students have taken the lead in this area. See the oath and its signatories here. Read about it in Wikipedia, too!
Market Triads: A Theoretical and Empirical Analysis of Market Intermediation (Journal for the Theory of Social Behavior, June 2002)
This paper examines the role of executive search firms in CEO search. The paper argues that the numerical shift from two party market transactions (e.g. buyers and sellers) to three party transactions (e.g. buyers, sellers, and third party) transforms market exchanges and the roles of the various participants in these exchanges in ways not anticipated by existing theories. At the heart of my findings is a perspective that describes ESFs as intermediaries to a complex labor market exchange. As intermediaries, the role of the third-party is not to broker relationships between two parties that are disconnected from each other; rather the role is to create a working relationship between two parties that are quite well aware of each others existence. The identification of the intermediary role in markets presents a theoretical challenge to the existing brokerage literature in sociology, which characterizes the third party as an opportunistic actor bringing together two unconnected actors. One implication of the existing theoretical research is that if the two other actors could communicate directly with each other, the third would not be needed. Yet this is clearly not the case in the CEO labor market, where directors and candidates are often acutely aware of each other's existence, but where their relationship is defined largely through an intermediary.
The Strategic and Performance Consequences of CEO Succession
The argument of this paper (with Nitin Nohria) is that research on executive turnover treats the departures of predecessors and the origin of successors as independent events. This approach has led to mixed empirical findings with respect to measuring the effects of executive turnover on firm performance. Using a panel data set, we show that the conditions under which the predecessor departs (forced versus natural turnover) and the origin of the successor (insider versus outsider) are theoretically coupled phenomena with distinct combinations leading to differences in subsequent performance.
Searching for a Corporate Savior: The Irrational Quest for Charismatic CEOs ( Princeton University Press, October 2002)
In this book, I argue that the external CEO labor market was born in a burst of rhetoric about wresting control of corporations away from a group of self-interested insiders, as senior managers in the era of managerial capitalism had come to be portrayed. The rationale for expanding CEO search beyond the confines of the internal labor market was that it would open the CEO position to a broader group of individuals who brought greater talents and breadth of vision than could be found within any one company, and who had little vested interest in the status quo. The external CEO market thus expropriated the principles of the market and the logic of competition. It proposed to take a closed system and crack it open.
Based on evidence presented in the book, I argue, however, the external CEO succession process, as it currently operates, is anything but an open, competitive system. While todays CEO labor market is defended as if it were a market in the classical sense, it is, in reality, nothing of the sort. Far from being the institution-free mechanism portrayed by economists and even some sociologists, the external CEO search process is governed at every stage by structural rules and institutions previously thought to be confined to the firm. In the process as it actually unfolds in one large firm after another, external institutions such as socially-based categories of eligibility, the evaluations of investors and the media, and outside intermediaries (i.e., executive search firms) play a central role in controlling access to jobs and facilitating or hindering mobility.
Because the external CEO market deviates in critical ways from the kinds of markets described by classical economics, its outcomes cannot be assumed to optimal and efficientas, indeed, they turn out not to be when examined critically. To take just one example, as a result of the workings of the external institutions governing the external CEO selection process, many individuals who could be CEOs are not even on the radar screens of those who could be tapping them for the position. Thus the external CEO search process has created a permanently closed ecosystem of top-tier executives for whom what looks like a glass ceiling from below is, viewed from above, perfectly opaque, since it hides those on the lower floors from the view of directors and search firms. This is not only a waste of talent but also, as it turns out, a recipe for returning corporations to the kind of oligarchic control from which external CEO search was supposed to deliver them.
Bringing Individuals Back In: The Effects of Career Experience on New Firm Founding (forthcoming Industrial and Corporate Change, 2003)
In this paper (with Scott Shane) the link between the career experiences of potential entrepreneurs and the decision to found a new firm is explored. Because of methodological and theoretical obstacles, sociological research on organizational foundings has largely focused on societal and population level factors to explain firm foundings. This paper takes the view that understanding firm foundings also requires linking to micro-level processes. We suggest that careers are a useful way to link individual-level processes to firm foundings. We test our explanation on the population of inventions patented at MIT over the 1980-1996 period and examine the effect of inventors' prior experiences on the probability that an invention will be commercialized through the founding of a new organization. This paper received the 2001 Academy of Management Best Paper award in the Organization and Management Theory division .
Secrets of Succession (Financial Times, December 6, 2002, with Nicholas Carr)
Boards often choose a new chief executive in response to outside pressures, skewed perceptions and simple convenience. In this extended essay, we argue for a return to objectivity and rigour in the selection process.