Power, Performance, and Succession in the Large Corporation

Abstract

The authors wish to thank Mayer N. Zald, Jeffrey Pfeffer, William H. Form, Curt Tausky, Donald A. Dillman, and several anonymous ASQ reviewers for their comments on earlier versions of this paper. This research examines the effects of managerial power and corporate performance on managerial tenure and longevity and the probability of managerial succession in 242 large industrial corporations between 1971 and 1980. The power of a chief executive officer is defined in terms of his relationship to any family represented on the board of directors that controls a significant block of the voting stock in the corporation. Managerial power was directly related to both managerial tenure and longevity, even controlling for the effects of corporate performance. Similarly, managerial power was inversely related to the probability of managerial succession during periods of poor corporate performance. These relationships were contingent, however, on the extent of stock ownership by the controlling family. Finally, although the proportion of internal directors had no effect on either managerial tenure or longevity, it did have an effect, along with corporate performance, on the degree of internal recruitment for a successor to the chief executive officer.*