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      How Do CEOs Make Strategy?
      17 Dec 2020Working Paper Summaries

      How Do CEOs Make Strategy?

      by Mu-Jeung Yang, Michael Christensen, Nicholas Bloom, Raffaella Sadun, and Jan Rivkin
      A study of 262 Harvard Business School-educated CEOs traces differences in strategic decision-making across managers. CEOs leading larger, faster-growing firms tend to make highly structured strategic decisions and use more analytical deliberation. Management education has long-lasting effects on decision-making.
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      Author Abstract

      We explore the critical question of how executives make strategic decisions. Utilizing a new survey of 262 CEO alumni of Harvard Business School, we gather evidence on four aspects of each executive’s business strategy: its overall structure, its formalization, its development, and its implementation. We report three key results. First, different CEOs use markedly different processes to make strategic decisions; some follow highly formalized, rigorous, and deliberate processes, while others rely heavily on instinct and intuition. Second, more structured strategy processes are associated with larger firm size and faster employment growth. Third, using a regression discontinuity centered around a change in the curriculum of Harvard Business School’s required strategy course, we trace differences in strategic decision making back to differences in managerial education.

      Paper Information

      • Full Working Paper Text
      • Working Paper Publication Date: October 2020
      • HBS Working Paper Number: HBS Working Paper 21-063
      • Faculty Unit(s): Strategy
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      Jan W. Rivkin
      Jan W. Rivkin
      C. Roland Christensen Professor of Business Administration
      Senior Associate Dean, Chair, MBA Program
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      Raffaella Sadun
      Raffaella Sadun
      Professor of Business Administration
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