Abstract
A co-leadership structure at the executive level is characterized by the presence of two co-CEOs exerting mutual influence on each other while working together towards common goals. This study relies on the unity of command and social comparison theories to investigate the relationship between power differences within co-CEO dyads and firm innovation. The results from a sample of US firms led by co-CEOs in the 2000 2016 period indicate an inverted U-shaped relationship, such that: 1) power differences between co-CEOs are positively related to firm innovation when power differences are below a high level; and 2) this positive relationship becomes negative as power differences become very large. This study improves upon Krause, Priem, and Love’s (2015) analysis by arguing that social psychological factors affect collaboration between co-CEOs and advances innovation literature by illustrating that the conditions under which a co-leadership structure promotes innovation are non-linear. These results suggest important implications for scholars and practitioners who are dealing with the strategic framing of the top executive team and aim at pursuing corporate results in terms of innovation.
Highlights
In today’s economy, firms are challenged to stay competitive and offer innovative products and services (Kor, 2006; Rim & Ghazi, 2010)
research and development (R&D) is negatively correlated with assets in thousands (ASSETS), ROA and CFO, with higher R&D associated with lower firm size ( = -0.18), profitability ( = -0.52) and liquidity ( = -0.78), respectively
Given the interdependence nature of co-chief executive officers (CEOs) work, understanding how interpersonal influence shapes corporate behavior is of great interest to various stakeholders
Summary
In today’s economy, firms are challenged to stay competitive and offer innovative products and services (Kor, 2006; Rim & Ghazi, 2010). R&D investments indicate the strategic importance of innovation for a firm and build long-term benefits (Block, 2012; Ghazi & Rim, 2014). Nowadays, since it is challenging for a single leader to manage and promote innovation, there is a growing need for novel models of leadership. As such, Bligh, Pearce, and Kohles (2006), Pearce and Manz (2005), and Pearce (2004) explicitly suggested the need to shift the focus from traditional models of leadership, largely based on upward and downward hierarchical influence processes, to shared leadership approaches, in which multiple leaders are engaged in reciprocal and peer influence. The implementation of shared leadership is not always associated with a positive outcome (Krause, Priem, & Love, 2015; O’Toole, Galbraith, & Lawler, 2002) as teams often fail to coordinate their members’ actions and lack effective leadership to coordinate this process (Burke, Fiore, & Salas, 2003)
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