2017
Chapter
Measuring Entrepreneurial Businesses: Current Knowledge and Challenges

Are Founder CEOs Good Managers?

By: Victor Manuel Bennett, Megan Lawrence and Raffaella Sadun

Format:Print

Abstract

We investigate the management practices adopted by firms where the founders are also the CEOs using data from the World Management Survey. We find that founder CEO firms have the lowest management scores of any owner-manager pair type and that this difference is associated with significant performance differentials. We propose three possible reasons for the managerial gap of founder CEO firms: a) informational problems preventing a clear understanding of the weakness of their firms’ managerial practices; b) institutional factors dampening the incentive to adopt managerial practices; and c) nonpecuniary returns to potentially inefficient but power-preserving practices. The findings presented in the paper provide support for a) and c), while we do not find evidence that the management practices of founder CEO firms vary with respect to the characteristics of the institutional environments in which they are embedded.

Keywords

Management Practices And Processes; Performance

Citation

Bennett, Victor Manuel, Megan Lawrence, and Raffaella Sadun. "Are Founder CEOs Good Managers?" Chap. 4 in Measuring Entrepreneurial Businesses: Current Knowledge and Challenges. Vol. 75, edited by John Haltiwanger, Erik Hurst, Javier Miranda, and Antoinette Schoar, 153–185. Studies in Income and Wealth (NBER). Chicago: University of Chicago Press, 2017.