The Ins-and-Outs of CEO Influence: Sources, Processes, and Extensions

There is little doubt that CEOs are of considerable importance when studying firm behaviors and outcomes. Specifically, research on the “CEO effect” or the CEO’s impact on firm performance has highlighted the CEO as a unique individual in the firm who guides its strategic direction and has expanded into examining the CEO’s influence over various firm outcomes. However, research in this domain often receives criticism that the translation between CEO- level factors and firm-level outcomes is somewhat ambiguous. Most apparently, an abundance of research has examined how much individual characteristics of CEOs explain variance in firm outcomes. In addition, managerial discretion research has furthered our understanding of various factors that constrain/promote the CEOs’ influences. Yet our understanding of the various mechanisms of the CEO effect—how CEOs matter—is still very much limited. As such, we need a better understanding of how to interpret and incorporate the CEO effect in explaining firm outcomes. This PDW seeks to gather scholars from diverse domains of management research, including literatures on upper echelons, leadership, teams, and strategic renewal. We thereby build both theoretical and practical perspectives to inform the complications around the CEO effect and collectively discuss some of the challenges and considerations as we engage in this area of research.