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Diversification strategy, CEO management style and firm performance: an application of Heckman’s two-stage method

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Abstract

This paper aims to explore whether CEOs’ management style as agents or as stewards, which depends on their psychological and situational characteristics, moderates the effect of the diversification strategy on firm performance. After applying Heckman’s two-stage method to control econometrically for endogeneity bias in empirical work, results demonstrate that the relationship between diversification and profitability varies significantly depending on the management style of the diversifying CEO.

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Correspondence to Almudena Martínez-Campillo.

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Martínez-Campillo, A., Fernández-Gago, R. Diversification strategy, CEO management style and firm performance: an application of Heckman’s two-stage method. Qual Quant 45, 59–73 (2011). https://doi.org/10.1007/s11135-009-9290-3

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Keywords

  • Diversification strategy
  • CEO management style
  • Firm performance
  • Heckman’s two-stage method