Managing Firms in an Emerging Economy: Evidence from the Time Use of Indian CEOs

Format:Print
| Language:English

Abstract

The success or failure of a company is often ascribed to the behavior of its CEO. Yet little is known about what top managers actually do, whether this matters for firm performance, and why it differs across firms. We provide some answers by developing a new survey instrument to collect data on CEO time use in the Indian manufacturing sector, where the productivity dispersion across firms is substantial. Time use analysis of 354 CEOs of listed firms yields three sets of findings. First, there is substantial heterogeneity in total hours worked ("labor supply") and the allocation of time across different activities, constituencies, and modes of interaction ("style"). Second, both labor supply and style are strongly correlated with firm productivity and profitability. Third, controlling for state and industry traits, family CEOs work fewer hours and adopt a less productive style. Using differences in exposure to competition and weather shocks, we argue that the behavioral differences between family and professional CEOs are easier to explain as differences in the preferences or skills of CEOs rather than optimal responses to different organizational structures.