Academic journal article Journal of Management and Organization

Exploring the Influence of Chief Executive Officer Professional Development and Work Context on Organisation Performance: A Multi-Theoretic Perspective

Academic journal article Journal of Management and Organization

Exploring the Influence of Chief Executive Officer Professional Development and Work Context on Organisation Performance: A Multi-Theoretic Perspective

Article excerpt

The 1980s, 1990s and 2000s have each seen sufficient incidence of corrupt corporate governance practices and/or poor strategic decision making by chief executive officers (CEOs) to justify a significant focus of academic and professional resources on rectifying this situation (Shleifer & Vishny, 1997; Cadbury, 2000; Kiel & Nicholson, 2003; OECD, 2004; Hambrick, Werder, & Zajac, 2008; Dowell, Shackell, & Stuart, 2011; Clarke, 2014). Examples from the early 2000s alone include the collapse of high profile corporations in the United States such as Enron Corporation and WorldCom, and in Australia One.Tel Limited and HIH Insurance Limited. These corporate collapses broadly highlight continuing shortcomings in corporate ethics and governance practice (Kiel, Nicholson, & Barclay, 2005; Kiel, Nicholson, Tunny, & Beck, 2012; Clarke, 2014). Poor CEO performance has been identified as a specific consideration in each of these company failures. The global financial crisis only served to further highlight the importance of broadly improving corporate governance practices and specifically improving the probability of the positive influence of a CEO delivering strong organisation performance (Smallman, McDonald, & Mueller, 2010). The qualifications, knowledge, experience and work context of the CEO as the key executive member, usually with a seat on the board of directors, can be a key differentiating element in getting strong organisation performance (Carpenter, Sanders, & Gregersen, 2001). The CEO is a key firm resource who can deliver a company a strong performance in his or her role (Carpenter, Sanders, & Gregersen, 2001). This is why this paper focuses on the CEO's professional development and work context and seeks to theoretically understand international best practice in relation to when and where these considerations deliver better organisation performance.

Stock exchange listed companies operate in a highly competitive business environment where they compete for access to capital and the best human resources (Clarke, 2014; Galvin & Arndt, 2014). Their business operations are regulated by the listing rules of the local stock exchange. Multinational companies can be listed in more than one country (e.g., BHP Billiton Limited, News Corporation Limited) creating additional international management and compliance challenges. Advances in transport, media and information technology have also increased the speed of the strategy cycle companies have to manage, creating additional demands on the strategic ability of the CEO (Hamel, 2000; Clarke, 2014).

CEOs able to perform strongly in any legal jurisdiction are a key organisation resource. The resource-based view of the firm and the dynamic capabilities perspective provide useful insight here (Galvin & Arndt, 2014). Applying these theories a human resource such as a CEO who is valuable, rare with a difficult to imitate bundle of qualifications, knowledge, skills (i.e., human capital) and networks (i.e., social capital) can be a source of competitive advantage to his or her employer over rival firms and this can help the firm generate favourable rents (Barney, 1991; Teece, Pisano, & Shuen, 1997; Tian, Haleblian, & Rajagopalan, 2011).

Australia and the United Kingdom are two countries that have what is understood internationally to be best practice in corporate governance (Kiel & Nicholson, 2003). This follows from Anglo corporate governance reports (e.g., Cadbury, 1992; Higgs, 2003; ASX, 2010) recommending an embrace of agency theory with separation of the roles of chair and CEO to avoid the principal-agent problem emerging and also company boards having a majority of outside directors (Kiel & Nicholson, 2003). This choice has been widely accepted and practiced by business and government in Australia and the United Kingdom and is evidenced in the Australian Stock Exchange Top 200 chairperson CEO separation statistic. …

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