Innovation and R&D in the Upper Echelons: The Association between the CTO's Power Depth and Breadth and the TMT's Commitment to Innovation

Abstract

Both practice and academic research observe the increasing occurrence and relevance of functional top management team (TMT) positions created to manage critical firm outcomes. Following this trend, firms have established Chief Technology Officers (CTOs) in their TMTs to give research-and-development- and innovation-related topics a voice in the firms' upper echelons and to ensure that these topics receive sufficient resources. However, there is large variety in CTOs' positioning and profiles across firms, ranging from CTOs who are deeply rooted in the scientific community with a legacy of subject-matter expertise to CTOs who are responsible for various other functions and operate at the center of the TMT. Despite this heterogeneity in CTOs' positioning, research has been silent on the CTO's optimal positioning in the top management to ensure that adequate resources are committed to innovation efforts. This paper closes this gap by examining the influence of the depth (conceptualized as structural and expert power) and breadth (conceptualized as multifunctional power) of the CTO's power, as characteristic features of the CTO's positioning, on the TMT's commitment to innovation. The research model is validated empirically by means of a multisource secondary panel data set comprising 266 firm-year observations from 55 S&P 500 firms between 1995 and 2012. This paper finds that innovation commitment increases with the CTO's level of structural power and decreases with increasing levels of the CTO's expert and multifunctional power. It has several theoretical and research-related implications for investigations of CTO positions, for innovation management theory building, and for the broader management literature.