LEADERSHIP IN SHELL COMPANY

Leadership in Shell Company

Leadership in Shell Company

Introduction

Research on strategic renewal has focused mainly on processes and outcomes of strategic renewal in large established firms (e.g. Agarwal and Helfat, 2009; Baden-Fuller and Volberda, 1997; Capron and Mitchell, 2009; Flier et al., 2003; Kim and Pennings, 2009; Volberda et al., 2001a, 2001b). However, previous research also suggests that current literature on strategic renewal could benefit from studying the underlying organizational antecedents of strategic renewal using a longitudinal approach.

This paper intends to assist to the following two research gaps. First, the role of top managers and their corporate governance orientation are an underexplored organizational antecedent of strategic renewal (e.g. Filatotchev et al., 2006; Floyd and Lane, 2000; Hurst et al., 2007; Volberda et al., 2001a). Upper echelons literature pinpoints that compositional and background characteristics of top managers play a crucial role in recognizing and pursuing strategic choices (Hambrick and Mason, 1984; Wiersema and Bantel, 1992). In this research stream, Johnson et al. (2005, p. 171) put forward a much-neglected inquiry: 'What is the purpose of a board and their deliberations on strategy?' While most studies have focused on linking top managers' characteristics with financial performance (e.g. Buyl et al., in press; Certo et al., 2006), few have examined how these characteristics affect strategic choices and actions (Goodstein and Boeker, 1991; Hambrick, 2007). Carter (2006) and Hambrick (2007) encourage scholars to explore this research area, particularly factors that influence the way managers interpret strategic choices they face. We contribute to this research gap by exploring top managers' corporate governance orientation as an antecedent of strategic renewal trajectories. Second, strategic renewal trajectories develop over time (Agarwal and Helfat, 2009; Chakravarthy and Doz, 1992). This implies that research on strategic renewal requires a longitudinal approach to investigate successive strategic renewal trajectories of a firm over the years (Volberda and Lewin, 2003). The number of such empirical studies is limited (e.g. Burgelman and Grove, 2007; Flier et al., 2003; Jenkins and Floyd, 2001; Kwee et al., 2008; Uotila et al., 2009; Volberda et al., 2001b). Our study answers this call for more longitudinal research by investigating strategic renewal trajectories for a period of almost a century, i.e. 1907-2004.

To address the aforementioned two research gaps, we use the upper echelons perspective together with corporate governance and strategic renewal literature to address the research question of how top managers' corporate governance orientation influences a firm's strategic renewal trajectories. To this end, we conducted a longitudinal study of a large incumbent firm: Royal Dutch Shell plc (Shell).

Shell is an interesting case for studying the evolvement of successive strategic renewal trajectories for two main reasons. First, during the period 1959-2004, Shell had a governance structure called 'Committee of Managing Directors' (CMD). Under this structure, Shell was governed by chairmen from either the Dutch (Rhine corporate governance orientation) or the British (Anglo-Saxon corporate governance orientation) side of the company. Prior to this period (1907-58), Shell comprised two separate companies with two separate management boards, i.e. Royal Dutch and case Transport and Trading. It was under the CMD structure that Anglo-Saxon and Rhine ...