Managerial Power and Tenure in the Large Corporation

Abstract

This research examines the relationship of managerial power, in terms of the stockholdings of both the chief executive officer and other directors, to the length of managerial tenure among 218 large industrial corporations. Analysis of covariance is employed to assess the effects of different control configurations on the length of tenure, controlling for the simultaneous effects of corporate size and performance. On the basis of this analysis, it is evident that significant stock ownership by the chief executive officer is associated with longer tenure; but significant stock ownership by other directors is not associated with shorter tenure. Also, there are no consistent relationships between the control configuration variables and either the age of the chief executive officer or his years of service with the corporation. Finally, the relationship between managerial power and tenure obtains even when the chief executive officer controls only a relatively small block of stock. Sociologists and other social scientists have demonstrated an abiding interest in the issue of managerial succession and tenure in organizations. Some researchers have focused primarily on the impact of managerial succession on subsequent organization performance (Allen et al; Eitzen and Yetman; Gamson and Scotch; Grusky, b). Conversely, other researchers have concentrated on the organization characteristics which affect the rate of managerial succession (Allen et al.; Gordon and Becker; Grusky, a; James and Soref); or, alternatively, the length of managerial tenure (Crain et al.; Kriesberg; McEachern; Salancik and Pfeffer). Implicit in most of these studies is the assumption that a change of organization leadership often leads to more fundamental changes in organization goals and operations (Perrow; Zald, c). Whatever the eventual consequences of managerial succession for the organization, the process of succession is important in its own right because it provides evidence concerning the internal politics of the organiPaper presented at the annual meeting of the Pacific Sociological Association, 1981. I thank Mayer N. Zald and William H. Form for their comments on an earlier version of this paper. ? 1981 The University of North Carolina Press. 0037-7732/81/020482-94$01.30