Publication in Academy of Management Discoveries on "Multi-CEOs"
How do CEOs who lead multiple companies simultaneously justify their actions to their stakeholders?
A recent study published in the journal Academy of Management Discoveries investigates this question. Researchers from TU Dortmund and HEC Lausanne examined prominent multi-CEOs who manage several independent companies in parallel. They used extensive data on four multi-CEOs: Elon Musk (Tesla and SpaceX), Carlos Ghosn (Renault and Nissan), Jack Dorsey (Twitter and Square), and Steve Jobs (Apple and Pixar) to show how these leaders ensure the legitimacy of their arrangements.
Given the numerous responsibilities of CEOs and the fact that they bear the overall responsibility for the success of a company, it might seem imprudent or illegitimate to investors and other stakeholders for one person to lead multiple companies simultaneously. Constantine Alexandrakis of Russell Reynolds Associates commented: "Running a single company should take 150% of a CEO's attention."
In light of this, multi-CEOs often publicly emphasize that while such an arrangement is not ideal, it is necessary and unavoidable in their specific situation. Companies conduct thorough CEO search processes and proactively communicate this to build stakeholder trust. At the same time, multi-CEOs regularly highlight the support they receive from excellent teams and Chief Operating Officers who help them manage their tasks. For example, Elon Musk relies on Gwynne Shotwell at SpaceX. Symbolic compensation arrangements like Steve Jobs' $1 salary at Apple also contribute to legitimacy. Multi-CEOs strategically allocate their time between company headquarters and avoid potential conflicts of interest through clearly communicated decision-making rules.
Professor Hensellek summarizes the findings as follows: "The study provides valuable insights into how multi-CEOs and their allies publicly legitimize the unusual multi-CEO arrangements to lead multiple companies simultaneously. It raises awareness among investors and other stakeholders about the complex challenges and methods of multi-CEOs and shows how they manage their dual roles."
The Financial Times and Handelsblatt have covered the study and written their own articles about it. In the report "Is being a multi-CEO more trouble than it’s worth?" the Financial Times discusses the challenges for and typical characteristics of multi-CEOs highlighted by the researchers. Handelsblatt also explores the strategies of multi-CEOs like Elon Musk in its article "Mit welchen Strategien Multi-CEOs wie Elon Musk Konzerne führen" and applies these insights to Oliver Blume, who currently leads Volkswagen and Porsche.
Raval, A; 01.07.2024; Is being a multi-CEO more trouble than it’s worth?; Financial Times / FT.com
Kewes, T.; 25.06.2024; Mit welchen Strategien Multi-CEOs wie Elon Musk Konzerne führen; Handelsblatt
Citation:
Graf-Vlachy, L., Hensellek, S., & Haack, P. 2024. Multi-CEOs: A Legitimacy Perspective on Executives Leading Multiple Firms, Academy of Management Discoveries, online first https://doi.org/10.1177/01492063241226904.