The founder chief executive officer: A review of current insights and directions for future research

Abstract

Research Question/Issue: From its inception in the late 1980s and early 1990s, founder-chief executive officer (CEO) research has garnered significant scholarly attention in the strategy and entrepreneurship disciplines, although other fields-such as economics, finance, and family business-have also generated substantial research insight on this topic. Despite this progress, a limited consensus exists on the influence of the founder CEO owing to the fragmented nature of extant research. In this review, we address this fragmentation by reviewing current literature, synthesizing the discipline-specific findings into an integrated framework, and highlighting promising directions for future founder-CEO research. Research Findings/Insights: Using a cross-disciplinary review of founder-CEO research based on 221 articles from 24 academic journals, we synthesize current research and provide directions for future research. Our framework organizes current research on the founder CEO into three broad themes. First, we review and synthesize scholarly work on factors related to the founder CEO during the nascent years of the firm. In the second theme, we review research that explores the impact of the founder CEO on strategic choices and firm configurations. In the third theme, we review the performance consequences of the founder CEO. Theoretical/Academic Implications: This review advances research on the founder CEO by taking stock of insights from various disciplines, highlighting advancements made, and suggesting promising directions for future research on founder CEOs. Additionally, a critical evaluation of current methodological approaches provides opportunities for strengthening the rigor of scholarly inquiry in this area.

Founder teams and firm value in young public firms: An analysis of the moderating effect of founders' ownership power and team size

“…First, our findings extend research on the relationship between founder presence and firm value by filling a gap in the literature that has studied the effect of founder presence on firm value at various stages of a firm's lifecycle—that is, at startup (e.g., Jayaraman et al, 2000), at IPO (e.g., Bruton et al, 2010; Wasserman, 2003) and in larger and older public firms (e.g., S&P 500 in Anderson & Reeb, 2003; or Fortune 500 in Adams et al, 2009; and Villalonga & Amit, 2006)—but has paid less attention to young public firms (e.g., Dawson et al, 2018), where founders are much more present and active compared to the S&P 500 or Fortune 500 firms. As such, our study supports the idea that founder teams matter not only at startup but even after the firm goes public (Abebe et al, 2020; Nelson, 2003). At the same time, by contributing to the conversation on young public firms, we answer calls in the corporate governance literature to move beyond its predominant focus on large, mature public firms (Filatotchev et al, 2006; Garg, 2020), which limits generalizability of findings to earlier stage firms in which founders tend to be more powerful influences (Garg et al, 2018; Lungeanu & Zajac, 2019).…”

“…These include a deep sense of trust and a strong relationship (Ruef et al, 2003) allowing them to benefit from complementary knowledge, skills, experience, financial capital, and networks of contacts (Becker, 1975; Bruton & Rubanik, 2002; Coleman, 1988; Cooper & Bruno, 1977; Delmar & Shane, 2006; Kor et al, 2007; Roure & Maidique, 1986). They may also benefit from a deep knowledge of the firm in their roles as stewards, experts, and strategic decision makers, which are likely to continue across the lifecycle of a firm including beyond an IPO (Abebe et al, 2020). In addition, when the second founder owns a similar ownership stake to that of the main founder, they will be able to monitor the latter more effectively than would minority shareholders who have limited ownership power and influence.…”

“…Such a situation allows for one of the founders to emerge as a leader, while taking advantage of the benefits deriving from being part of a founder team. These benefits include, as illustrated above, trust, strong relationships (Ruef et al, 2003), complementary knowledge, skills, experience, financial capital, and networks (Becker, 1975; Bruton & Rubanik, 2002; Coleman, 1988; Cooper & Bruno, 1977; Delmar & Shane, 2006; Kor et al, 2007; Roure & Maidique, 1986) as well as deep knowledge of the firm and their roles as stewards, experts, and strategic decision makers that are likely to continue beyond an IPO (Abebe et al, 2020). With regard to ownership power, this occurs when the main founder has a relatively larger share of equity than do their cofounders and specifically when the main founder has high levels of ownership and thus owns an overwhelmingly dominant stake in the firm.…”

Immigrant founder chief executive officers, firm innovation, and performance: The role of cultural distance and top management team and board social capital

“…With immigrants coming from all over the world, leaving their country of origin, and residing in a new host country, the interest in immigrant-related research and implications has never reached such a peak (Dheer, 2018;Hernandez and Kulchina, 2020;Mata and Alves, 2018;Nee and Drouhot, 2020;Wadhwa et al, 2007). One topic in such area involves the effects of immigrant entrepreneurs on firm-related outcomes (Abebe et al, 2020;Allen and Busse, 2016;Dabic ́et al, 2020;Efendic et al, 2016;Riva and Lucchini, 2015;Tata and Prasad, 2015).…”

Taking stock of corporate governance research and future research opportunities

“…Our present review issue 2020 contains six first-rate articles that cover a broad set of highly relevant subjects including the role of different types of owners with regard to board governance (Federo, Ponomareva, Aguilera, Saz-Carranza, & Losada, 2020), the position of the chair of the board of directors (Banerjee, Nordqvist, & Hellerstedt, 2020), idiosyncrasies of founder CEOs (Abebe, Li, Acharya, & Daspit, 2020), the relationship between board and top management team (TMT) characteristics and technological innovation (Kurzhals, Graf-Vlachy, & König, 2020), the institutional embeddedness of corporate governance (Zattoni, Dedoulis, Leventis, & Van Ees, 2020), as well as the relationship between different types of ownership and the propensity of tunneling (Solarino & Boyd, 2020). With one exception that employs meta-analysis (cf.…”