NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Megan Lawrence

HBS

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NBER Working Papers and Publications

June 2016Are Founder CEOs Good Managers?
with Victor Manuel Bennett, Raffaella Sadun
in Measuring Entrepreneurial Businesses: Current Knowledge and Challenges, John Haltiwanger, Erik Hurst, Javier Miranda, and Antoinette Schoar, editors
We investigate the management practices adopted by firms where the founders are also the CEOs using data from the World Management Survey. We find that founder CEO firms have the lowest management scores of any owner-manager pair type and that this difference is associated with significant performance differentials. We propose three possible reasons for the managerial gap of founder CEO firms: a) informational problems preventing a clear understanding of the weakness of their firms’ managerial practices; b) institutional factors dampening the incentive to adopt managerial practices; and c) non-pecuniary returns to potentially inefficient but power-preserving practices. The findings presented in the paper provide support for a) and c), while we do not find evidence that the management pract...
 
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