Centers of Gravity: The Effect of Stable Shared Leadership in Top Management Teams on Firm Growth and Industry Evolution

CITATION

Agarwal, R., Braguinsky, S., & Ohyama, A. (2019). Centers of Gravity: The Effect of Stable Shared Leadership in Top Management Teams on Firm Growth and Industry Evolution. Strategic Management Journal. https://doi.org/10.1002/smj.3048

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ABSTRACT
Research Summary: We study the processes of firm
growth in the evolution of the Japanese cotton spinning
industry during 1883–1914 by integrating strategy and
historical approaches and utilizing rich quantitative firmlevel
data and detailed business histories. The resultant
conceptual model highlights growth outcomes of path
dependencies as firms evolve across periods of single versus
shared leadership, establish stability in shared leadership,
or experience repeated discord-induced top
management team (TMT) leader departures. While most
firms do not experience smooth transitions to stable shared
TMT leadership, a focus on value creation, in conjunction
with talent recruitment and promotion, enabled some firms
to achieve stable shared leadership despite discordinduced
departures, engage in long-term expansion, and
emerge as “centers of gravity” for output and talent in the
industry.
Managerial Summary: We demonstrate stable shared
leadership is at root of firms who emerge as centers of
gravity in an industry and account for the lion's share of
output. Stable shared leadership enables growth strategies
such as talent recruitment, product diversification, downstream
integration, and acquisitions. Stable shared leadership,
however, is extremely difficult to maintain. Most
firms experience discord-induced departures in TMTs due
to politics and power struggles. Firms that deviate from
this norm to become industry leaders achieve stable shared leadership by adhering to fundamental principles related
to long-term value creation as opposed to short-term gain,
adoption of merit-based promotion systems in defiance of
stereotypes, sharing of power within TMT leadership to
enable efficient division of labor, and honorable resolution
of conflicts and ethical breaches.


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