Why top management team characteristics matter when employing a chief operating officer : a strategic contingency perspective
By: MARCEL, Jeremy J
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ArticlePublisher: Bognor Regis : Wiley-Blackwell, June 2009Strategic Management Journal 30, 6, p. 647-658Abstract: Critics of the CEO/COO duo have stressed that this arrangement burdens the firm with increased costs and decreases the CEO's effectiveness. This study adopts an upper echelon perspective to argue that the presence of a COO may also create TMT-level information-processing benefits that can improve firm performance in certain conditions. Data from a sample of 153 firms in five industries highlight a strong positive relationship between the presence of a COO and two established measures of firm performance: return on assets and market-to-book ratio. The data also suggest that those relationships are contingent on the broader characteristics of the TMT.
Critics of the CEO/COO duo have stressed that this arrangement burdens the firm with increased costs and decreases the CEO's effectiveness. This study adopts an upper echelon perspective to argue that the presence of a COO may also create TMT-level information-processing benefits that can improve firm performance in certain conditions. Data from a sample of 153 firms in five industries highlight a strong positive relationship between the presence of a COO and two established measures of firm performance: return on assets and market-to-book ratio. The data also suggest that those relationships are contingent on the broader characteristics of the TMT.
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