Issue 1, 2011

Knatko D. M., Shirokova G. V. Influence of Institutional Business Environment on Owner’s Decision to Delegate Authority to a Hired CEO: Experience of the Russian Firms.

The article presents the results of a study on identifying factors that influence the decision of the owner to delegate management authority to a hired CEO in the Russian companies. Based on the literature analysis, the authors have formulated hypotheses regarding influence on owner’s decision to delegate management authority of such factors as negative perceptions of the institutional environment and misfit of company to formal regulatory and taxation norms. These hypotheses were tested using the sample of 354 Russian companies of small and medium-sized firms in three industries — HoReCa (hotels, restaurants, cafes), the IT industry, wholesale and retail trade. The analysis revealed that the owner’s decision to delegate management authority to a hired CEO is influenced by such factors as property and contractual rights security, compliance of firm with the formal regulatory norms. Using comparative analysis of the firms it was shown that that companies managed by owner are less profitable and have a higher concentration of ownership than companies managed by hired CEO. Keywords: Management Succession, Emerging Economies, Owner, Hired CEO, Institutional Environment.

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