CEO Power and Organizational Turnaround in Declining Firms: Does Environment Play a Role?

Abstract

Despite a disproportionate level of practitioner interest in the role of top management teams (TMTs), TMT power dynamics and its effect on turnaround performance has been one of the most understudied areas in the turnaround literature. Drawing from the strategic decision-making literature, this study empirically examined the relationship between CEO power and corporate turnaround performance under conditions of environmental stability/dynamism. Our analysis of 98 U.S. manufacturing firms that experienced serious performance decline and turnaround during 1990-2000 indicated a varying effect of CEO power on the extent of corporate turnaround performance in stable and dynamic environments.