The chairperson and CEO roles interaction and responses to strategic tensions

• Pages: 143-164
• Date: 05 February 2018
• DOI: https://doi.org/10.1108/CG-05-2017-0092
• Published date: 05 February 2018
• Author: Filipe Morais,Andrew Kakabadse,Nada Kakabadse
• Subject Matter: Strategy,Corporate governance

The chairperson and CEO roles

interaction and responses to

strategic tensions

Filipe Morais, Andrew Kakabadse and Nada Kakabadse

Abstract

Purpose –The purpose of this paper is to use Stewart’s model of role as a lense from which to explore

chairpersonand CEO role dynamics in addressingstrategic paradox and tension.

Design/methodology/approach –The paper draws on 29 semi-structured, in-depth interviews with

chairpersons and CEOs of UK-listed companies. Interview data are subjected to role analysis using

Stewart’s(1982) Demands-Constraints-Choice(DCC) model of role.

Findings –Findings indicate that relationship levels of trust, communication and chairperson time

enable strategic tensions to be raised and confronted in the relationship reducingdefensiveness. Two

distinct approaches to handle strategic tensions are found. The CEO-led approach predominates and

rests on less flexible roleboundaries, requiring the chairperson to proactivelyidentify strategic tensions

and performan advisory/mentoring role. The sharedleadership approach, less prevalent,rests on highly

flexible role boundaries where the skills and experience of each incumbent become more relevant,

enabling the separation of efforts andintegration of strategic tensions in the relationship in a “dynamic

complementarityof function”.

Research limitations/implications –The paper onlyapplies to the UK context and is limited to contexts

where CEO and chairperson roles are separate. The paper draws on individual perceptions of

chairpersonand CEOs (i.e. not pairs).

Practical implications –The paper provides insights to practicing CEOs and chairperson on two

distinctways of working through strategic paradox and tensions.

Originality/value –The paper adds to the scarceliterature at chairperson and CEO rolesand strategic

paradoxand tension.

Keywords CEO, Tensions, Role theory, Chairpersons, Strategic paradox

Paper type Research paper

Introduction

Extant literature links frame-breaking, discontinuous change with the emergence of

strategic paradoxes which corporate leadership needs to face. This is why firm-level

discontinuous change theoristshave since been interested in strategic paradoxes arising in

contexts of far-reaching organisational change (Smith et al.,2010;Smith and Tushman,

2005) and why organisational/strategic paradox scholars have equally selected such

contexts to examine the emergence of and response to organisational/strategic paradox

(Jarzabkowski et al.,2013;Schmitt and Raisch, 2013;Tse, 2013).

In the UK, the digital revolution brought discontinuous change to many traditional print and

entertainment firms, such as EMI, HMV and Yell Group. Corporate leadership in these firms

had to keep exploiting their declining legacy business, while simultaneously exploring

completely new ways of doing business in the digital age, remaining competitive and

attempting to survive. These types of situations often require business leaders to be able to

Filipe Morais is

Post-Doctoral Fellow

Governance, Leadership

and Directorship at

Department of Marketing

and Reputation, Henley

Business School, University

of Reading, Henley-on-

Thames, UK.

Andrew Kakabadse is

Professor of Governance

and Leadership and

Nada Kakabadse is

Professor of Policy

Governance and Ethics

both at Henley Business

School, University of

Reading, Henley-on-

Thames, UK.

Received 15 May 2017

Revised 26 July 2017

Accepted 8 August 2017

DOI 10.1108/CG-05-2017-0092 VOL. 18 NO. 1, 2018, pp. 143-164, © Emerald Publishing Limited, ISSN 1472-0701 jCORPORATE GOVERNANCE jPAGE 143

handle strategic tensions that arise from the clash between the legacy and the emerging

business in terms of contrasting and contradictory ways of organizing, performing and

learning (Smith and Lewis, 2011;Schmitt and Raisch, 2013). This leaves leaders having to

make sense of and navigate through short-term/long-term, exploration/exploitation,

retrenchment/recovery and perhaps other types of strategic paradoxes (Lewis et al.,2014;

Smith and Lewis, 2011;Schmitt and Raisch, 2013). Most studies on strategic paradoxes

invariably assign to the CEO the central role in effectively leading the firm through strategic

tension (Gilbert, 2006;Lewis et al.,2014;Tushman et al.,2011), neglecting the relationship

between the roles of Chairperson and CEO (Kakabadse et al.,2010;Roberts and Stiles,

1999;Stewart, 1991) as a critical factor that constrains and enables responses to strategic

paradoxical tension. Accordingto the agency theory, the board’s role is to debate, approve,

monitor and control strategy and its implementation by the CEO (Fama and Jensen, 1983;

Jensen and Meckling, 1976), prescribingthat the separation of the roles of chairperson and

CEO provides an ideal leadership structure to arrive at independent and effective

monitoring and control. Sundaramurthy and Lewis (2003) posit that role combination during

poor performance may result in escalating commitment (Brockner, 1992) and strategic

persistence (Audia et al.,2000), heralding firms into vicious reinforcing cycles.

In this paper, we explore how the role dynamics of the chairperson–CEO relationship

constrain or enable/support responses to strategic paradoxes. These are defined as

performing tensions at the organisational level that “stem from the plurality of stakeholders

and result in competing strategies and goals” (Smith and Lewis, 2011, p. 384). A caveat

must be made at this point. We were unable to select pairs of CEOs and chairpersons;

hence, this paper reports individual perceptions of the roles of chairpersons and CEOs and

their interplay in responding to strategic paradoxes. Despite this obvious limitation,

research on the chairperson–CEO relationship is sparse, as access to respondents is often

difficult (Leblanc and Schwartz, 2007). As far as we can assess, Stewart’s (1991) study is

the only relevant qualitative study that was able to collect pairs of respondents. Conscious

of this limitation, we decided nevertheless to use our data to reach a greater understanding

of how the critical and pivotal interplay between CEO and chairperson roles enables and

constrains responses to strategicparadoxes.

This paper finds two distinct approaches used by chairpersons and CEOs to handle

strategic tensions: shared-leadership and CEO-led. Whereas in Stewart (1991) a partner

style of relationship was prevalent, the findings in this study indicate the prevalence of a

CEO-led approach which requires:

nan active chairperson able to negotiate flexible role boundaries;

nproactive identification of strategic tensions the CEO is grappling with or unaware of;

and

nperforming a mentoring role so as to positively influence CEO cognitive recognition of

tensions and behavior.

A second approach to handling tensions agrees with Stewart’s earlier paper by pointing to

a shared leadership approach, which includes both chairperson roles as “partner” and

“executive” (Stewart, 1991). However, an important difference is that the “complementarity

of function” (Hodgson et al., 1965) that characterizes the partnership does not a static

division of responsibilities. Rather, it requires role boundaries that are highly flexible and a

complementarity of function that is not static but continuously negotiated according to

circumstances.

The paper is organised as follows: literature on strategic paradox and tensions is briefly

reviewed. This is followed by a discussionon agency and stewardship theories of the board

and corresponding board leadership structures, as well as the chairperson–CEO

relationship. We then present a detailed qualitative, interview-based methodology guided

by role theory (Stewart, 1982). As early research work developed by Professor Rosemary

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