An Exploratory Study on the Relationship among CEO Dominant Power, Organizational Performances, and the Endogenous / Exogenous Factors

This paper is aimed to investigate the relationship between CEO dominant power and organizational performances and examine the influence of endogenous / exogenous factors on the relationship of them. We developed and tested hypotheses using data from 147 manufacturing firms with only one CEO among 437 listed manufacturing firms in Korean Stock Market as of 2014. To measure the variables, In particular, we classified CEO dominant power into CEO dominant power in organizational structure (CEO's tenure, CEO's share ratio) and CEO dominant power in corporate governance (ratio of outside directors, ratio of institutional investors). Endogenous factor is whether or not firms belong to large corporation group, and exogenous factor is intensity of industry competition. We apply multiple and hierarchical regression analysis, and ANOVA to test hypotheses. The results of the study are as follows; Firstly, CEO dominant power in organizational structure (CEO's tenure, CEO's share ratio) has a positive effects on organizational performances. However, CEO dominant power in corporate governance, and the interaction of the two types of the CEO dominant power do not have statistically significant effects on organizational performances. Secondly, whether the large corporation group as an endogenous factor and the intensity of industry competition as an exogenous factor do not play moderating role in the relationship between CEO dominant power and organizational performances. This study measured the CEO's dominant power of the listed manufacturing companies in Korean Stock Market by using the CEO's tenure and CEO's share ratio, not the demographic (or psychological) characteristics. And we also found that the stronger dominant power of CEO in organization structure, the more positively it can play a role in the improvement of the organizational performances. The results of this study will help us to understand the role of endogenous and exogenous factors (whether or not firms belong to large corporation group, and intensity of industry competition) in relationship between the CEO's dominant power and organizational performances in Korean Stock Market. In addition, this study will provide an opportunity to think more deeply about the moderating role of endogenous and exogenous factors in the relationship.