Founders aren’t great CEOs

Founder-run companies are less well run than those where the management didn’t start the firm, a study by business professors at three US universities concludes.

Firms led by founders generally ranked lower on management scores in data collected by the World Management Survey, which reviews upwards of 13,000 mid-to-large firms in 32 countries.

Those companies were also 9.2 per cent less productive, on average, notes a story in Quartz at Work.

The subpar management scores improved after the founder made way for a new CEO.

Most founder CEOs are pushed out in favor of professional management as a company grows, particularly in firms that do an initial public offering.

The very temperament that leads a person to start a company — having the ability to decide how things should operate — can lead to poor management decisions, the study’s authors suggest.

As printed in The Marketplace – Jan/Feb 2018


Latest Featured Stories

MiCrédito at 20

November 6, 2023

Veronica Herrara has a grand vision for MiCrédito, the Nicaraguan microfinance institution that MEDA helped launch 20 years ago. She...

MEDA by the numbers 2003-2023

November 6, 2023

At a Glance, MEDA has impacted 65 Countries with 92 Projects, 90 Consultancies, 27 MEDA Risk Capital Fund investments, and...

Board chairs share their memories of serving with MEDA

November 6, 2023

As MEDA celebrates 70 years of investing in entrepreneurs, The Marketplace magazine asked people who have chaired the organization’s board...