---SUMMARY OF PHD THESIS A STUDY OF THE IMPACTS OF CEO’S CHARACTERISTICS ON THE PERFORMANCE OF A NUMBER OF OUTSTANDING LISTED ENTERPRISES Major: Business Administration Code number: 9340
Trang 1-SUMMARY OF PHD THESIS
A STUDY OF THE IMPACTS OF CEO’S
CHARACTERISTICS ON THE PERFORMANCE OF A NUMBER OF OUTSTANDING LISTED ENTERPRISES
Major: Business Administration Code number: 9340101
Hanoi – 2019 The thesis is completed at: Foreign Trade University – No.91,Chua Lang Street, Dong Da, Hanoi
Science instructors:
Trang 2Reviewer 1:
Reviewer 2:
Reviewer 3:
The research shall be presented in front of the council meeting at
Trang 31 Research background
From the perspective of modern management, the CEO acts
as a spearhead for development, playing the make-or-break role inevery business In addition, CEOs tend to be outstanding individualswhose talents attest their competence at making important decisionsthat greatly affect the performance and operation of organizations,businesses run by them
Studies of human psychology have shown that differentcharacteristics of demographics, behavioral psychology, experience,seniority of work, personalities, and genders might exert a stronginfluence to each individual’s behavior This fact is well-applied toCEOs as well, as leadership studies have shown that the style, habits,
or behaviors of a particular leader are the outward reflection of avariety of this CEO’s typical characteristics and that has directimpacts on the performance of organizations and businesses they run.Therefore, the influence of a leader’s characteristics of on differentaspects of business operation has been one among many contents thatattract scholars and researchers in the field of business administrationworldwide
Family-owned enterprise (FOE) is a business model derivedfrom the family form and is the basic model in economicorganization models in many countries in the world, especially inVietnam, where the family culture dominates most relationships insociety Moreover, from the perspective of governance, FOEs alwayshave advantages in terms of organization, strategy or decisionmaking compared to other private or state-owned enterprises due tothe characteristics of family ownership, monitoring and operationalmechanism (Dieleman et al., 2013) Therefore, this is really abusiness model with many typical elements for analysis and findings
Although CEO plays an important role in the performance ofbusinesses, current discussions and studies on CEO are mostly
Trang 4general, introductory The theoretical basis lacks in-depth research onthe CEO and the role of the CEO in specific types of businesses.Moreover, in our country, current studies on CEOs still heavily relies
on theories available in the world, leading to inevitable inadequaciesand differences when applied in particular situations in Vietnam.That is the main reason explaining the fact that information on CEOs
is redundant yet insufficient in Vietnam today
From all the reasons mentioned above, the topic " A study of the impacts of CEO's characteristic on the performance of a number of outstanding listed enterprises businesses" is necessary
with implications both in theory and practice
Secondly, studies show the omnidirectional influence of theCEO's characteristics on an enterprise’s performance, and theirheterogeneous impact, which is likely to change at times
Thirdly, the science of management in approaching toanthropological and psychological characteristics is an attractiveresearch topic with many theoretical and application which can beexploited in in corporate governance activities
Fourthly, in Vietnam, current studies on CEO is limited to afew general studies, and there are almost no studies on the influence
of CEO's personal characteristics on the performance of anenterprise
Fifth, in Vietnam, currently there are not any in-depth studies
on the personal characteristics of CEOs in a typical group / businessmodel, such as FOEs
Trang 53 Research question
(1) Do the CEO's characteristics influence the performance
of listed family-owned enterprises?
(2) How is the influence of CEO's characteristics on the ofperformance of listed family-owned enterprises?
4 Research objectives
The thesis aims to study the impacts of CEO’s characteristics
on the performance on some outstanding listed enterprises, in whichthe thesis focuses on a number of typical family-owned enterprisestoday
5 Research object and scope
5.1 Research object
The object of the research is the impacts of CEO’scharacteristics on the performance on some outstanding listedenterprises
5.2 Research scope
- Scope of content: The study focuses on identifying the
impacts of CEO’s characteristics on the performance on someoutstanding listed enterprises, in which CEO’s characteristics areclassified into two major groups: (1) the intrinsic characteristics ofthe CEO - demographic characteristics, (2) CEO personalcharacteristics related to seniority and management structure of theenterprise - working characteristics The thesis shall focus onstudying the influence of CEO's personal characteristics on theperformance of listed family-owned enterprises
- Scope of space: the study carries out research on personal
characteristics of CEOs who are currently at the helm of listedenterprises
- Scope of time: the thesis chooses the study period from
2012-2018 It is because in the period before 2012, information oncorporate governance reports (CG) has not been given adequateattention by the Vietnam's stock market On the other hand, from
Trang 62012 to the present, the macro economy has only experienced steadygrowth and development, the stock market has had positivedevelopments For these reasons, the scope of time the thesis is theperiod of 2012-2018 to ensure adequate information from thefinancial statements, annual reports and governance reports.
6 Research structure
The structure of the research is divided into five chaptersincluding chapter 1: Introduction; Chapter 2: Theoretical background forthe impacts of CEO’s characteristics on the performance of listedfamily-owned enterprises; Chapter 3: Research methodology; Chapter 4:Analysis on the impacts of CEO’s characteristics on the performance oflisted family-owned enterprises; Chapter 5: Discussions and findingsand recommendations
CHAPTER 1: LITERATURE REVIEW
1.1 Theoretical background on CEO’s characteristics
Studies on the CEO's personal characteristics have beenconducted in-depth to explore the role and influence of these personalcharacteristics on executive style and habits
In general, all research directions indicate that the CEO'spersonal characteristics have a strong influence on the style andworking habits, and leadership, thereby affecting many differentaspects of business operation At present, there still exist manyperspectives of different views and approaches on CEO'scharacteristics, however, from the author's perspective, it is possible
to refer to the research results of Hambrick and Mason (1984) whoform the basis of the approach to the personal characteristics of theCEO In particular, Hambrick and Mason, in their research, initiallyaffirm that the behavior of each CEO is the reflective side of a range
of personal characteristics factors such as age, education level,seniority, typical characteristics These groups of behavioral patternsinfluence the decisions of the CEO in the process of running abusiness, thereby affecting the operation outcomes and the
Trang 7performance of an enterprise.
In summary, the CEO's personal characteristics can bedivided into two main groups: (i) Demographic characteristics, (ii)Working characteristics
1.2 Theoretical background on the performance of enterprises
Business performance has long been a topic of interest toresearchers because this is a measure to evaluate the effectiveness ofmeasures and tools that enterprises have been making use of duringits production and business activities According to Hult et al (2008),although there are many different approaches and measures of firmperformance today, there are three commonly used performancemeasurement criteria namely financial performance, operationperformance, or overall performance
While there are many different approaches andmeasurements of the above concept, one of the most widely studiedand considered aspects is the financial aspect, which is the result ofachieving the economic goals Normally, to assess the performance
of businesses according to financial aspects (financial performance)one of two ways of measurements shall be used: (i) Profit Indicatorsuch as the ratio of profit over the total assets (ROA), the ratio ofprofit over the revenue (ROS), the return on equity (ROE); (ii)Market indicators such as Tobin’s Q and market return ratio
The above-stated studies reinforce the suitability of selectingROA and ROE as a reference to evaluate the performance ofenterprises in this thesis paper
1.3 Theoretical background on family-owned enterprises
Family-owned enterprises is a form of primitive economicorganization that contributes greatly to the development of everyeconomy Moreover, this is also a type of business with many distinctcharacteristics Therefore, researches on FOEs has been started sincethe middle of the 20th century Basically, researches on FOEs havebeen conducted mainly on dissecting the nature of this type through
Trang 8finding a sufficiently thorough and convincing definition Some ofthe studies on this topic by authors such as Litz (1995), Wortman(1995), Shanker and Astranchan (1996), Wall (1998) Though theseauthors have different approaches to the nature of this type ofbusiness, all focus on the basic factors that make up the basiccharacteristics of such type of business such as: family ownership,family control, number family members in executive committee….
In Vietnam, fully aware of the contribution that FOEs havemade to the overall development of the economy in recent years,many scholars have recently conducted research to learn about thetype this business
The research system in and outside Vietnam has reaffirmedthe typical character of this type of business, as well as the suitabilitywhen the thesis selects FOEs as a typical enterprise type for study
1.4 Theoretical background on the impacts of CEO's characteristic on the performance of enterprises
In the world, this research direction appeared early and there
is evidence to conclude that CEO characteristics have an impact onthe business operation
The results of the afore-mentioned studies around the world,
in Asia and in Vietnam, once again reaffirm that CEOs have theability to strongly impact the value of their enterprise There aresome common points when discussing the personal characteristics ofthe CEO and the impact of the above characteristics on theperformance of an enterprise:
- Presenting the concept of executive director's personalcharacteristics;
- Pointing out the influential personal characteristics groups
of CEOs such as age, gender, ownership, remuneration of the CEO that affect the working style and performance of the enterprise run bythem;
- Systematizing and classifying groups of individualcharacteristics according to the degree of influence / impact on the
Trang 9business performance.
CHAPTER 2: THEORIES OF THE IMPACTS OF CEO’S CHARACTERISTICS ON THE PERFORMANCE OF LISTED
FAMILY-RUN ENTERPRISES 2.1 Overview on Chief Executive Officer (CEO)
Currently, in the world, there exist a number of differentapproaches to CEO These approaches are generally dominated,influenced by business culture, corporate governance model The first approach: From the viewpoint of dual leadership, insome companies the CEO is also the chairman of the board
A second approach: Popular in several countries in theEuropean Union, two separate boards of leadership exist in theoperation of organizations, one in charge of day-to-day operation andone in charge of providing orientation for the company (elected fromshareholders)
2.1.2 The role of the CEO in the performance of a business
Depending on the organizational structure of each business,CEO will be responsible for the different roles in the operations ofthe organization Basically, the role of the CEO is as a survivingfactor of a business due to their executive positions
The CEO must run the company's daily business in accordancewith the law, the company's charter, the labor contract signed withthe company and the resolution of the Board of Directors If
Trang 10operating in contravention of this regulation causes damage to thecompany, the Director or General Director must take responsibilitybefore law and must pay damages to the company.
Whether by the first approach (concurrently responsibleresponsibilities and rights, CEO and chairman of the Board ofDirectors) or the second approach (CEO independent of the Board ofDirectors), the CEO's role is generally related to every aspect ofevery organization's operation
2.1.3 Requirements to CEO
Requirements for the CEO in the process of running a business
is most evident through the requirement of the CEO's leadershipwhich is an important issue in businesses today In terms ofleadership qualities, the typical studies are by Stodgdill (1948, 1974),Mann (1959), Lord et al (1986) and Kirkpartrick (1991) Regardingthe competence and skills of leaders, typical studies include those ofMumford et al (2000) and Yammarino (2000)
CEO's leadership is a combination of knowledge, skills andqualities that a CEO needs in his leadership, subordinate team,organizational leadership to achieve the goals of the business.determined from the beginning Specifically:
Leadership knowledge: Leadership knowledge is
theknowledge and understanding that a person acquires, accumulatesthrough experience or learn and is capable of applying to hisleadership
Leadership skills: This is the ability to perform tasks, turn
knowledge into actions Leadership skills show the proficiency ofeach person when applying leadership knowledge in practicalmanagement to achieve the set goals
2.2 Overview on the personal characteristics of the CEO 2.2.1 Concepts of personal characteristics, personal characteristics of CEOs
According to Holland (1960), “individual characteristics of aperson are a collection of personality traits and individual
Trang 11psychological styles that dictate the manner in which individuals actand how they respond to their surroundings
From the perspective of behavioral psychology, psychologistLeochiev (1962) points out that: "The development of humanpsychology and personality is closely connected with thedevelopment of human activities in practice, in which some activitiesplay a major (leading) role, others play a minor (auxiliary) role.Psychological studies have shown that not only the individualcharacteristics of people but only the characteristics that regulatepeople as a member of society speak up the psycho-social aspect,values and personality of each individual These attributes that make
up the distinctive characteristics of each individual are oftenexpressed on three levels: the level of internal individuals(personality, thinking habits ); interpersonal level (communication,behavior, ability to influence ) and the level of expression of itsactivities and products (work results)
2.2.2 Some basic attributes of CEO personal characteristics
According to Pham Minh Hac (1999), the individualcharacteristics of each person are governed by four basic attributes:stability, unity, activeness and interpersonal characteristics At thesame time, the CEO's personal characteristics also carry all the basicattributes of the personal trait
This system of characteristics influences and influences thehandling habits and styles, resolves situations arising at work,thereby affecting work efficiency and problem solving
2.2.3 Approaches to the CEO's personal characteristics
Although there are many different approaches, it can bebasically divided into two main groups:
- Group 1 is demographic characteristics such as age,nationality, gender, hometown, living culture, etc Thesecharacteristics are basic, have direct and fundamental influence onCEO behavior and affect cognitive ability, thinking, work capacity
Trang 12- Group 2 is the work characteristics such as industry, businessarea, seniority, management experience, share ownership rate, part-time rights… These characteristics are often greatly influenced byobjective factors, external environment, allowing explanation toexplain the unique characteristics of the CEO in each industry orsector in which they participate.
2.3 Listed family-owned enterprises and the role of listed family-owned enterprises in economic development
2.3.1 Overview on family-owned enterprises
Family-owned enterprise is one of the earliest economicorganizations of human society, and has made many positivecontributions to the development of economies around the world.From the governance perspective, there are many advantages ofFamily-owned company in terms of organizational, strategic ordecision-making features over other private or state-ownedenterprises The strength of the family-owned company is thecooperation between the key members However, when familyownership of the family-owned enterprise is passed down through thegenerations, the heirs must share the ownership of the company in apartnership They must together decide how to manage and run thefamily-owned enterprise as a common property, and that's whencorporate governance issues arise The vast majority of family-ownedenterprise have difficulty in dealing with this management issue.(Ward, 1988)
With many outstanding and unique advantages, the question ofwhether or not an enterprise is a family-owned enterprise is still a topconcern of researchers (Peter, 2005) At present, there are still manydifferent definitions of family-owned enterprise depending ondifferent conditions such as culture, legal environment, religion,production and business activities Different ways of defining withdifferent criteria will influence the behavior and performance of thebusiness
2.3.2 Overview concept of family-owned enterprise