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The Diversification-Performance relationship in Spanish Firms: PDF Print E-mail

Does The CEO´S Behaviour Style matter?

Authors: Almudena Martínez-Campillo, Roberto Fernández-Gago

Abstract:

The agency-stewardship theoretical framework posits that CEOs may choose to act as agents or as stewards. CEOs as agents are economically rational individuals driven by self-interest, whereas CEOs as stewards are self-actualizing individuals that behave pro-organizationally. Our study extends this framework to analyze whether the CEO´s behavior style affects the diversification-performance relationship. After applying Heckman´s method on a sample of Spanish firms, our results verify that diversification affects positively on firm performance and such effect is significantly strong when this strategy is managed and implemented by a CEO inclined to behave as steward.

Keywords:
Diversification strategy, firm performance, CEOs behavior style, agent, steward
 
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