Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/62526
Authors: 
Guadalupe, Maria
Li, Hongyi
Wulf, Julie M.
Year of Publication: 
2012
Series/Report no.: 
Discussion Paper series, Forschungsinstitut zur Zukunft der Arbeit 6635
Abstract: 
This paper shows that top management structures in large US firms radically changed since the mid-1980s. While the number of managers reporting directly to the CEO doubled, the growth was driven primarily by functional managers rather than general managers. Using panel data on senior management positions, we explore the relationship between changes in executive team composition, firm diversification, and IT investments - which arguably alter returns to exploiting synergies through corporate-wide coordination by functional managers in headquarters. We find that the number of functional managers closer to the product (product functions i.e., marketing, R&D) increase as firms focus their businesses, while the number of functional managers farther from the product (administrative functions i.e., finance, law, HR) increase with IT investments. Finally, we show that general manager pay decreases as functional managers join the executive team suggesting a shift in activities from general to functional managers - a phenomenon we term functional centralization.
Subjects: 
communication
organizational design
functions
centralization
M-form
hierarchy
top management team
information technology
activities
diversification
JEL: 
J24
J33
L25
D22
Document Type: 
Working Paper

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