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  • April 2014
  • Article
  • Management Science

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

By: Maria Guadalupe, Hongyi Li and Julie Wulf
  • Format:Print
  • | Pages:39
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Abstract

Top management structures in large U.S. 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; Functions; Centralization; M-form; Hierarchy; Top Management Team; C-Suite; Activities; Organizational Change and Adaptation; Diversification; Managerial Roles; Organizational Design; Information Technology; Organizational Structure; Management Teams; United States

Citation

Guadalupe, Maria, Hongyi Li, and Julie Wulf. "Who Lives in the C-Suite? Organizational Structure and the Division of Labor in Top Management." Management Science 60, no. 4 (April 2014): 824–844.
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More from the Authors

    • 2014
    • Faculty Research

    Pay Harmony: Peer Comparison and Executive Compensation

    By: Claudine Gartenberg and Julie Wulf
    • Fall 2012
    • California Management Review

    The Flattening Firm—Not As Advertised

    By: Julie Wulf
    • May–June 2012
    • European Business Review

    The Rise of the Functional Manager: Changes Afoot in the C-Suite

    By: Maria Guadalupe, Julie Wulf and Hongyi Li
More from the Authors
  • Pay Harmony: Peer Comparison and Executive Compensation By: Claudine Gartenberg and Julie Wulf
  • The Flattening Firm—Not As Advertised By: Julie Wulf
  • The Rise of the Functional Manager: Changes Afoot in the C-Suite By: Maria Guadalupe, Julie Wulf and Hongyi Li
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