Professor Ines Black found that CEO quality and company fit drive firm performance equally
Companies hiring top managers should focus on finding the right match at least as much as on chasing the top-quality candidate, as inferred from their resume
Image: Shutterstock
The quality of a CEO can make a difference in driving company performance, but a substantial part of this added value comes from how they fit with a specific company.
“Some top managers contribute to the performance of the firm above and beyond what the firm would already do without them,” said Ines Black, an assistant professor of strategy at Duke University’s Fuqua School of Business, “but you can't fully separate the manager from the firm.”
In the working paper, Better Together? CEO Identity and Firm Productivity, Professor Black introduces a new way of measuring the quality of a CEO based on their pre-CEO career and employee-firm data across many years.
Leveraging the same historical dataset, she was also able to quantify the unique contribution CEO-company fit brings to firm performance.
“Firms are not abstract entities,” she said. “People in charge matter and firm-CEO match matters.”
[This article has been reproduced with permission from Duke University's Fuqua School of Business. This piece originally appeared on Duke Fuqua Insights]