Centers of gravity: The effect of stable shared leadership in top management teams on firm growth and industry evolution

Abstract

Research Summary We study the processes of firm growth in the evolution of the Japanese cotton spinning industry during 1883–1914 by integrating strategy and historical approaches and utilizing rich quantitative firm‐level data and detailed business histories. The resultant conceptual model highlights growth outcomes of path dependencies as firms evolve across periods of single versus shared leadership, establish stability in shared leadership, or experience repeated discord‐induced top management team (TMT) leader departures. While most firms do not experience smooth transitions to stable shared TMT leadership, a focus on value creation, in conjunction with talent recruitment and promotion, enabled some firms to achieve stable shared leadership despite discord‐induced departures, engage in long‐term expansion, and emerge as “centers of gravity” for output and talent in the industry. Managerial Summary We demonstrate stable shared leadership is at root of firms who emerge as centers of gravity in an industry and account for the lion's share of output. Stable shared leadership enables growth strategies such as talent recruitment, product diversification, downstream integration, and acquisitions. Stable shared leadership, however, is extremely difficult to maintain. Most firms experience discord‐induced departures in TMTs due to politics and power struggles. Firms that deviate from this norm to become industry leaders achieve stable shared leadership by adhering to fundamental principles related to long‐term value creation as opposed to short‐term gain, adoption of merit‐based promotion systems in defiance of stereotypes, sharing of power within TMT leadership to enable efficient division of labor, and honorable resolution of conflicts and ethical breaches.

Founding Teams and Startup Performance

“…We identify High Tech industries based upon their relative share of Science, Technology, Engineering, and Math workers using the classification developed byGoldschlag and Miranda (2016), which is based upon the work ofHecker (2005).4 For example,Agarwal, Braguinsky, and Ohyama (2019) stress the importance of stable shared leadership of the top management team. SeeKlotz, Hmieleski, Bradley, and Busenitz (2014) for a review.…”

Does humility of project manager affect project success? Confirmation of moderated mediation mechanism

“…Top management transfers power to project managers and considers their inputs that created the working atmosphere (Agarwal et al, 2020;Gopalakrishna-Remani et al, 2019). Such cohesive enactment helps the humble project manager and team members improve their performance (Owens and Hekman, 2016), a vital prerequisite for completing the project.…”

“…Key stakeholders in a project are top management, mostly because of their role in developing and designing the project strategies and supporting the project managers to warrant its effective execution (Ahmed et al, 2016). The interacting effect of top management support plays a crucial role in leadership and project outcomes (Agarwal et al, 2020). A modest project manager, including professional leadership like leadership quality, could not successfully achieve the project unless the senior management supports them.…”

Moderated Mediation Analysis of Leader Technology Orientation: A Study of Operations and Manufacturing Leaders of India

“…In business leadership literature, the role of leadership, both at the team or department level and at the organization level, has been emphasized over the years (Landis et al, 2014). Leaders who lead business firms with their skills and activities received a separate treatment from researchers and practitioner alike, and the field of strategic leadership was established (Agarwal et al, 2020).…”

“…However, Chen et al (2019) in his work, was specific to the leadership of a firm as a pivotal element for organizational success. Thus from then onwards, a strand of literature devoted to leadership and its strategic contours got established (Agarwal et al, 2020). One of the essential components of a business leader's strategic role was that of directing their firm in the long term (Jansen et al, 2009).…”