Disruptive Innovation (DI) and Chief Executive Officer(CEO): A synthetic literature review

Authors

  • Chen Fu Universiti Teknologi Malaysia, Malaysia
  • Logaiswari Indiran Universiti Teknologi Malaysia, Malaysia
  • Umar Haiyat Abdul Kohar Universiti Teknologi Malaysia, Malaysia

DOI:

https://doi.org/10.47742/ijbssr.v4n11p1

Keywords:

Innovation, disruptive innovation, CEO, CEO power, CEO compensation

Abstract

Objective: This paper reviews the findings of empirical studies linking disruptive innovations directly or indirectly to CEOs for the period 2019-2023. It also explores disruptive innovation and the fuzzy concepts of CEO and CEO power and proposes future research directions.

Research Design & Methods: Research methods are based on comprehensive literature reviews. In a three-step process, relevant papers are identified and categorized. These samples are then analyzed and brought into perspective to explain the concept of disruptive innovation and CEO, based on which recommendations for future research are made.

Findings: Although many studies imply a correlation between disruptive innovation and CEOs, there are no empirical studies specifically addressing this link. The main reason seems to be a lack of clarity about the concept of "CEO" itself.

Contribution & Value Added: This study introduces the concept of disruptive innovation based on the study of existing literature. Furthermore, it is an excellent starting point for scholars interested in clarifying disruptive innovation or preventing the discovery of the nature of the relationship between disruptive innovation and the CEO.

Downloads

Download data is not yet available.

References

Adams, R. B., & Ferreira, D. (2007). A theory of friendly boards. The journal of finance, 62(1), 217-250.

Adams, R. B., & Mehran, H. (2005, August). Corporate performance, board structure and its determinants in the banking industry. In EFA 2005 Moscow meetings.

Adams, R. B., Almeida, H., & Ferreira, D. (2005). Powerful CEOs and their impact on corporate performance. The Review of Financial Studies, 18(4), 1403-1432.

Assink, M. (2006). Inhibitors of disruptive innovation capability: a conceptual model. European journal of innovation management, 9(2), 215-233.

Ansari, S., Garud, R., & Kumaraswamy, A. (2016). The disruptor's dilemma: TiVo and the US television ecosystem. Strategic management journal, 37(9), 1829-1853.

Allgood, S., & Farrell, K. A. (2000). The effect of CEO tenure on the relation between firm performance and turnover. Journal of financial research, 23(3), 373-390.

Al Saedi, N. G., Al-Sharif, E. M., Mousa, A., & Alsuhaibani, A. H. (2019). The impact of surgical training on the practice of recently graduated ophthalmologists at Riyadh’s ophthalmology residency program. Saudi Journal of Ophthalmology, 33(4), 319-325.

Bebchuk, L. A., Cremers, K. M., & Peyer, U. C. (2011). The CEO pay slice. Journal of financial Economics, 102(1), 199-221.

Bebchuk, L. A., Fried, J., & Walker, D. (2002). Managerial power and rent extraction in the design of executive compensation.

Bertrand, M., & Schoar, A. (2003). Managing with style: The effect of managers on firm policies. The Quarterly journal of economics, 118(4), 1169-1208.

Bouncken, R. B., Pesch, R., & Kraus, S. (2015). SME innovativeness in buyer–seller alliances: effects of entry timing strategies and inter-organizational learning. Review of Managerial Science, 9, 361-384.

Bower, J. L., & Christensen, C. M. (1995). Disruptive technologies: catching the wave.

Burgstahler, D. C., Hail, L., & Leuz, C. (2006). The importance of reporting incentives: Earnings management in European private and public firms. The accounting review, 81(5), 983-1016.

Bogers, M., Foss, N. J., & Lyngsie, J. (2018). The “human side” of open innovation: The role of employee diversity in firm-level openness. Research Policy, 47(1), 218-231.

Bertrand, M., Black, S. E., Jensen, S., & Lleras-Muney, A. (2015). Breaking the glass ceiling.

Bebchuk, L. A., & Fried, J. M. (2003). Executive compensation as an agency problem. Journal of economic perspectives, 17(3), 71-92.

Cai, Y., Sevilir, M., & Yang, J. (2015). Made in CEO factories. Kelley School of Business Research Paper, (15-13).

Cesca, J., McDonald, A., Rahardjo, A., Kraakman, B., Malpas, I., & Vallin, L. (2010, January). Case Study–Successful Operation of Biotechnology for Odour Control at Western Treatment Plant. In Odors and Air Pollutants Conference 2010 (pp. 603-614). Water Environment Federation.

Charitou, C. D., & Markides, C. C. (2003). Responses to disruptive strategic innovation. MIT Sloan Management Review.

Chintrakarn, P., Jiraporn, P., & Singh, M. (2014). Powerful CEOs and capital structure decisions: Evidence from the CEO pay slice (CPS). Applied Economics Letters, 21(8), 564-568.

Christensen, C. M. (1997). Marketing strategy: learning by doing. Harvard business review, 75(6), 141-151.

Christensen, C. M., & Overdorf, M. (2000). Meeting the challenge of disruptive change. Harvard business review, 78(2), 66-77.

Christensen, C. M., Anthony, S. D., & Roth, E. A. (2004). Seeing what's next: Using the theories of innovation to predict industry change. Harvard Business Press.

Christensen, C. M., McDonald, R., Altman, E. J., & Palmer, J. (2016). Disruptive innovation: Intellectual history and future paths (pp. 1-52). Cambridge, MA: Harvard Business School.

Christensen, C. M., Baumann, H., Ruggles, R., & Sadtler, T. M. (2006). Disruptive innovation for social change. Harvard business review, 84(12), 94.

Chesbrough, H., & Kusunoki, K. (2001). The modularity trap: innovation, technology phase shifts, and the resulting limits of virtual organizations. Managing industrial knowledge, 6, 202-230.

Christensen, C., Raynor, M. E., & McDonald, R. (2013). Disruptive innovation. Brighton, MA, USA: Harvard Business Review.

Chen, C., Zhang, J., & Guo, R. S. (2016). The D-Day, V-Day, and bleak days of a disruptive technology: A new model for ex-ante evaluation of the timing of technology disruption. European Journal of Operational Research, 251(2), 562-574.

Christensen, C. M., Bartman, T., & Bever, D. V. (2016). The hard truth about business model innovation.

Cheng, X., Gao, L., Lawrence, J. E., & Smith, D. B. (2014). SEC division of corporation finance monitoring and CEO power. Auditing: A Journal of Practice & Theory, 33(1), 29-56.

Christensen, C. M., McDonald, R., Altman, E. J., & Palmer, J. (2016). Disruptive innovation: Intellectual history and future paths (pp. 1-52). Cambridge, MA: Harvard Business School.

Cho, V., & Chan, A. (2015). An integrative framework of comparing SaaS adoption for core and non-core business operations: An empirical study on Hong Kong industries. Information systems frontiers, 17, 629-644.

Christensen, C. M., McDonald, R., Altman, E. J., & Palmer, J. E. (2018). Disruptive innovation: An intellectual history and directions for future research. Journal of management studies, 55(7), 1043-1078.

Christensen, C. M., Raynor, M. E., & Anthony, S. D. (2003). Six keys to building new markets by unleashing disruptive innovation. Harvard Management. EEUU.

Cozzolino, A., Verona, G., & Rothaermel, F. T. (2018). Unpacking the disruption process: New technology, business models, and incumbent adaptation. Journal of Management Studies, 55(7), 1166-1202.

Cuñat, V., & Guadalupe, M. (2009). Globalization and the provision of incentives inside the firm: The effect of foreign competition. Journal of Labor Economics, 27(2), 179-212.

Custódio, C., & Metzger, D. (2014). Financial expert CEOs: CEO׳ s work experience and firm׳ s financial policies. Journal of financial economics, 114(1), 125-154.

Custódio, C., Ferreira, M. A., & Matos, P. (2013). Generalists versus specialists: Lifetime work experience and chief executive officer pay. Journal of Financial Economics, 108(2), 471-492.

Chen, G. (2015). Initial compensation of new CEOs hired in turnaround situations. Strategic Management Journal, 36(12), 1895-1917.

Dey, A., Engel, E., & Liu, X. (2011). CEO and board chair roles: To split or not to split?. Journal of corporate finance, 17(5), 1595-1618.

Driver, C., & Guedes, M. J. C. (2012). Research and development, cash flow, agency and governance: UK large companies. Research Policy, 41(9), 1565-1577.

Daily, C. M., & Johnson, J. L. (1997). Sources of CEO power and firm financial performance: A longitudinal assessment. Journal of Management, 23(2), 97-117.

Dalton, D. R., & Dalton, C. M. (2007). CEO succession: the times they are a‐changin'. Journal of business strategy, 28(1), 5-7.

Eisenhardt, K. M., & Bourgeois III, L. J. (1988). Politics of strategic decision making in high-velocity environments: Toward a midrange theory. Academy of management journal, 31(4), 737-770.

Faccio, M., Marchica, M. T., & Mura, R. (2016). CEO gender, corporate risk-taking, and the efficiency of capital allocation. Journal of corporate finance, 39, 193-209.

Fahlenbrach, R. (2009). Founder-CEOs, investment decisions, and stock market performance. Journal of financial and Quantitative Analysis, 44(2), 439-466.

Falato, A., Li, D., & Milbourn, T. (2015). Which skills matter in the market for CEOs? Evidence from pay for CEO credentials. Management Science, 61(12), 2845-2869.

Finkelstein, S. (1992). Power in top management teams: Dimensions, measurement, and validation. Academy of Management journal, 35(3), 505-538.

Frank, M. Z., & Goyal, V. K. (2007). Corporate leverage: How much do managers really matter?. Available at SSRN 971082.

Furr, N., & Dyer, J. (2014). The innovator's method: bringing the lean start-up into your organization. Harvard Business Review Press.

Gao, N., & Jain, B. A. (2011). Founder CEO management and the long-run investment performance of IPO firms. Journal of Banking & Finance, 35(7), 1669-1682.

García-Manjón, J. V., & Romero-Merino, M. E. (2012). Research, development, and firm growth. Empirical evidence from European top R&D spending firms. Research Policy, 41(6), 1084-1092.

Gemici, E., & Alpkan, L. (2015). An application of disruptive innovation theory to create a competitive strategy in Turkish air transportation industry. Procedia-Social and Behavioral Sciences, 207, 797-806.

Govindarajan, V., & Kopalle, P. K. (2006). Disruptiveness of innovations: measurement and an assessment of reliability and validity. Strategic management journal, 27(2), 189-199.

Gow, I. D., Kaplan, S. N., Larcker, D. F., & Zakolyukina, A. A. (2016). CEO personality and firm policies (No. w22435). National Bureau of Economic Research.

Gomez-Mejia, L. R., Nunez-Nickel, M., & Gutierrez, I. (2001). The role of family ties in agency contracts. Academy of management Journal, 44(1), 81-95.

Gha, H., Kim, M. Y., Ro, H. J., & Choi, S. (2023). Importance of CEO Attention in Influencing Incumbent Responses to Disruptive Innovation. Administrative Sciences, 13(6), 142.

Graham, J. R., Harvey, C. R., & Puri, M. (2013). Managerial attitudes and corporate actions. Journal of financial economics, 109(1), 103-121.

Haleblian, J., & Finkelstein, S. (1993). Top management team size, CEO dominance, and firm performance: The moderating roles of environmental turbulence and discretion. Academy of management journal, 36(4), 844-863.

Hambrick, D. C. (2007). The field of management's devotion to theory: Too much of a good thing?. Academy of management journal, 50(6), 1346-1352.

Han, S., Nanda, V. K., & Silveri, S. (2016). CEO power and firm performance under pressure. Financial Management, 45(2), 369-400.

Hang, C. C., Chen, J., & Yu, D. (2011). An assessment framework for disruptive innovation. foresight, 13(5), 4-13.

Hatch, N. W., & Dyer, J. H. (2004). Human capital and learning as a source of sustainable competitive advantage. Strategic management journal, 25(12), 1155-1178.

Henderson, A. D., Miller, D., & Hambrick, D. C. (2006). How quickly do CEOs become obsolete? Industry dynamism, CEO tenure, and company performance. Strategic Management Journal, 27(5), 447-460.

Hermalin, B. E. (2005). Trends in corporate governance. The Journal of Finance, 60(5), 2351-2384.

Hermalin, B. E., & Weisbach, M. S. (1998). Endogenously chosen boards of directors and their monitoring of the CEO. American Economic Review, 96-118.

Hyder, A. S., Sundström, A., & Chowdhury, E. H. (2022). Knowledge of Network-Based Market Orientation for the Internationalization of Disruptive Innovation in SMEs. Central European Management Journal, 30(3), 36-60.

Hang, C. C., Garnsey, E., & Ruan, Y. (2014). Disruptive innovation and entrepreneurial opportunity. Technovation.

Haleblian, J., Devers, C. E., McNamara, G., Carpenter, M. A., & Davison, R. B. (2009). Taking stock of what we know about mergers and acquisitions: A review and research agenda. Journal of management, 35(3), 469-502.

Hambrick, D. C., & Fukutomi, G. D. (1991). The seasons of a CEO's tenure. Academy of management review, 16(4), 719-742.

Hambrick, D. C., & D'Aveni, R. A. (1992). Top team deterioration as part of the downward spiral of large corporate bankruptcies. Management Science, 38(10), 1445-1466.

Hambrick, D. C., & Cannella Jr, A. A. (2004). CEOs who have COOs: Contingency analysis of an unexplored structural form. Strategic Management Journal, 25(10), 959-979.

Jiraporn, P., Chintrakarn, P., & Liu, Y. (2012). Capital structure, CEO dominance, and corporate performance. Journal of Financial Services Research, 42, 139-158.

Judge, T. A., & Piccolo, R. F. (2004). Transformational and transactional leadership: a meta-analytic test of their relative validity. Journal of applied psychology, 89(5), 755.

Jensen, M. C., & Murphy, K. J. (1990). CEO incentives: It's not how much you pay, but how.

King, A. A., & Baatartogtokh, B. (2015). How useful is the theory of disruptive innovation? MIT Sloan management review, 57(1), 77.

Kumaraswamy, A., Garud, R., & Ansari, S. (2018). Perspectives on disruptive innovations. Journal of Management Studies, 55(7), 1025-1042.

Katerina, D. (2018). The Relationship Between CEO Tenure and Firm Financial Performance in Energy Companies.

Kaplan, S. N., Klebanov, M. M., & Sorensen, M. (2012). Which CEO characteristics and abilities matter?. The journal of finance, 67(3), 973-1007.

Katz, R. L. (2002). Creative destruction: business survival strategies in the global Internet economy. Mit Press.

Kandil, T., Taramol, K. G., & Bhavani, G. (2018). Disruptive information and the cost of equity finance of small firms: Moderating of CEO succession mechanism. Prabandhan: Indian Journal of Management, 11(1), 9-21.

Kandil, T. T., Nassar, S., & Taysir, M. (2019). Blockchain technology: A review of the contemporary disruptive business applications. Architectures and Frameworks for Developing and Applying Blockchain Technology, 86-109.

Li, T., Munir, Q., & Abd Karim, M. R. (2017). Nonlinear relationship between CEO power and capital structure: Evidence from China's listed SMEs. International Review of Economics & Finance, 47, 1-21.

Liu, W., Liu, R. H., Chen, H., & Mboga, J. (2020). Perspectives on disruptive technology and innovation: Exploring conflicts, characteristics in emerging economies. International Journal of Conflict Management, 31(3), 313-331.

Luo, X., Kanuri, V. K., & Andrews, M. (2014). How does CEO tenure matter? The mediating role of firm‐employee and firm‐customer relationships. Strategic Management Journal, 35(4), 492-511.

Li, M., & Yang, J. (2019). Effects of CEO duality and tenure on innovation. Journal of Strategy and Management, 12(4), 536-552.

Lam, T. Y., & Lee, S. K. (2008). CEO duality and firm performance: evidence from Hong Kong. Corporate Governance: The international journal of business in society, 8(3), 299-316.

Leonidou, L. C., Christodoulides, P., & Thwaites, D. (2016). External determinants and financial outcomes of an eco‐friendly orientation in smaller manufacturing firms. Journal of Small Business Management, 54(1), 5-25.

Levenburg, N. M., Schwarz, T. V., & Motwani, J. (2005). Understanding adoption of internet technologies among SMEs. Journal of Small Business Strategy (archive only), 16(1), 51-70.

Macher, J. T., & Richman, B. D. (2004). Organisational responses to discontinuous innovation: a case study approach. International Journal of Innovation Management, 8(01), 87-114.

Malmendier, U., & Tate, G. (2008). Who makes acquisitions? CEO overconfidence and the market's reaction. Journal of financial Economics, 89(1), 20-43.

McClelland, P. L., Liang, X., & Barker III, V. L. (2010). CEO commitment to the status quo: Replication and extension using content analysis. Journal of Management, 36(5), 1251-1277.

Miller, D. (1991). Stale in the saddle: CEO tenure and the match between organization and environment. Management science, 37(1), 34-52.

Miller, D., & Shamsie, J. (2001). Learning across the life cycle: Experimentation and performance among the Hollywood studio heads. Strategic Management Journal, 22(8), 725-745.

Minichilli, A., Nordqvist, M., Corbetta, G., & Amore, M. D. (2014). CEO succession mechanisms, organizational context, and performance: A socio‐emotional wealth perspective on family‐controlled firms. Journal of Management Studies, 51(7), 1153-1179.

Musteen, M., Barker III, V. L., & Baeten, V. L. (2010). The influence of CEO tenure and attitude toward change on organizational approaches to innovation. The Journal of Applied Behavioral Science, 46(3), 360-387.

Madhavan, R., Koka, B. R., & Prescott, J. E. (1998). Networks in transition: How industry events (re) shape interfirm relationships. Strategic management journal, 19(5), 439-459.

Meyer‐Doyle, P., Lee, S., & Helfat, C. E. (2019). Disentangling the microfoundations of acquisition behavior and performance. Strategic Management Journal, 40(11), 1733-1756.

Nagy, D., Schuessler, J., & Dubinsky, A. (2016). Defining and identifying disruptive innovations. Industrial marketing management, 57, 119-126.

Nuanpradit, S. (2018). The relationship between information asymmetry and real earnings management: The role of CEO duality in Thailand. Journal of Business Administration, 41(158), 48-69.

Neirotti, P., & Raguseo, E. (2017). On the contingent value of IT-based capabilities for the competitive advantage of SMEs: Mechanisms and empirical evidence. Information & Management, 54(2), 139-153.

Onali, E., Galiakhmetova, R., Molyneux, P., & Torluccio, G. (2016). CEO power, government monitoring, and bank dividends. Journal of Financial Intermediation, 27, 89-117.

Osiyevskyy, O., & Dewald, J. (2015). Explorative versus exploitative business model change: the cognitive antecedents of firm‐level responses to disruptive innovation. Strategic Entrepreneurship Journal, 9(1), 58-78.

Padula, G., & Dagnino, G. B. (2007). Untangling the rise of coopetition: the intrusion of competition in a cooperative game structure. International Studies of Management & Organization, 37(2), 32-52.

Pillai, R., Schriesheim, C. A., & Williams, E. S. (1999). Fairness perceptions and trust as mediators for transformational and transactional leadership: A two-sample study. Journal of management, 25(6), 897-933.

Radhi, F., & Pramuditya, F. (2021). Disruptive Innovation of Gojek indonesia. JURNAL AKUNTANSI, EKONOMI Dan MANAJEMEN BISNIS, 9(1), 47-59.

Ramdorai, A., Herstatt, C., Ramdorai, A., & Herstatt, C. (2015). Disruptive innovations theory. Frugal innovation in healthcare: how targeting low-income markets leads to disruptive innovation, 27-38.

Reza, S. W. (2021). (Disruptive) innovations and rival firm outcomes.

Rothaermel, F. T., & Boeker, W. (2008). Old technology meets new technology: Complementarities, similarities, and alliance formation. Strategic management journal, 29(1), 47-77.

Rouyre, A., & Fernandez, A. S. (2019). Managing knowledge sharing-protecting tensions in coupled innovation projects among several competitors. California Management Review, 62(1), 95-120.

Ryan, H. E., Wang, L., & Wiggins, R. A. (2009). Board-of-director monitoring and CEO tenure. Available at SSRN 992857.

Roe, M. J. (2013). Corporate short-termism—in the boardroom and in the courtroom. The Business Lawyer, 977-1006.

Sariol, A. M., & Abebe, M. A. (2017). The influence of CEO power on explorative and exploitative organizational innovation. Journal of Business Research, 73, 38-45.

Satell, G. (2017). Mapping innovation: A playbook for navigating a disruptive age (Vol. 21). New York, NY: McGraw-Hill Education.

Schmidt, A. L., & van der Sijde, P. (2022). Disruption by design? Classification framework for the archetypes of disruptive business models. R&D Management, 52(5), 893-929.

Schmidt, C., & Fahlenbrach, R. (2017). Do exogenous changes in passive institutional ownership affect corporate governance and firm value?. Journal of financial economics, 124(2), 285-306.

Serfling, M. A. (2014). CEO age and the riskiness of corporate policies. Journal of corporate finance, 25, 251-273.

Simsek, Z. (2007). CEO tenure and organizational performance: An intervening model. Strategic Management Journal, 28(6), 653-662.

Singh, S., Wood, G., Darwish, T. K., Fleming, J., & Mohamed, A. F. (2019). Human resource management in multinational and domestic enterprises: A comparative institutional analysis in Southeast Asia. Thunderbird International Business Review, 61(2), 229-241.

Tellis, G. J. (2006). Disruptive technology or visionary leadership?. Journal of Product Innovation Management, 23(1), 34-38.

Tsai, W. (2002). Social structure of “coopetition” within a multiunit organization: Coordination, competition, and intraorganizational knowledge sharing. Organization science, 13(2), 179-190.

Tushman, M. L., & Anderson, P. (1986). Technological discontinuities and organizational environments. Administrative science quarterly, 439-465.

Tushman, M. L., & Nelson, R. R. (1990). Introduction: Technology, organizations, and innovation. Administrative science quarterly, 35(1), 1-8.

Tushman, M. L., & O'Reilly, C. A. (1997). Sorting organizational hardware. The Journal of Business Strategy, 18(4), 43.

Veprauskaitė, E., & Adams, M. (2013). Do powerful chief executives influence the financial performance of UK firms?. The British accounting review, 45(3), 229-241.

Wang, G., Holmes Jr, R. M., Oh, I. S., & Zhu, W. (2016). Do CEOs matter to firm strategic actions and firm performance? A meta‐analytic investigation based on upper echelons theory. Personnel Psychology, 69(4), 775-862.

Wiersema, M. F., & Bantel, K. A. (1992). Top management team demography and corporate strategic change. Academy of Management journal, 35(1), 91-121.

Wu, S., Levitas, E., & Priem, R. L. (2005). CEO tenure and company invention under differing levels of technological dynamism. Academy of Management Journal, 48(5), 859-873.

Wan, F., Williamson, P. J., & Yin, E. (2015). Antecedents and implications of disruptive innovation: Evidence from China. Tech novation, 39, 94-104.

Yadav, M. S., Prabhu, J. C., & Chandy, R. K. (2007). Managing the future: CEO attention and innovation outcomes. Journal of marketing, 71(4), 84-101.

Yami, S., & Nemeh, A. (2014). Organizing coopetition for innovation: The case of wireless telecommunication sector in Europe. Industrial Marketing Management, 43(2), 250-260.

Yang, Y. W., Tao, X. B., Tu, J. B., Liu, P., & Li, J. P. (2021). Internet brand innovation: What is it? What core concepts does it include? Does it affect Performance?. South African Journal of Business Management, 52(1), 11.

Yang, T., & Zhao, S. (2014). CEO duality and firm performance: Evidence from an exogenous shock to the competitive environment. Journal of banking & finance, 49, 534-552.

Zacharias, N. A., Six, B., Schiereck, D., & Stock, R. M. (2015). CEO influences on firms' strategic actions: A comparison of CEO-,firm-, and industry-level effects. Journal of Business Research, 68(11), 2338-2346.

Zona, F. (2016). Agency models in different stages of CEO tenure: The effects of stock options and board independence on R&D investment. Research Policy, 45(2), 560-575.

Downloads

Published

2023-11-30

How to Cite

[1]
Chen Fu, Logaiswari Indiran and Umar Haiyat Abdul Kohar 2023. Disruptive Innovation (DI) and Chief Executive Officer(CEO): A synthetic literature review. International Journal of Business and Social Science Research. 4, 11 (Nov. 2023), 1–12. DOI:https://doi.org/10.47742/ijbssr.v4n11p1.