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Organizational structures must be both stable and flexible

In addition to determining new strategic initiatives, top-level managers also develop the appropriate organizational structure and reward systems of a firm

The CEO is the individual with primary responsibility for effective strategic leadership within an organization

Firms switch from a functional structure to a multidivisional structure because greater levels of environmental complexity and uncertainty make it necessary for the firm to develop cooperative relationships with its stakeholders

Research has consistently shown that there is one best way to structure all organizations, regardless of competitive strategy

A CEO may gain power by holding the titles of both CEO and chairman of the board

Hedge funds, as part of the market for corporate control, identify a firm that is underperforming and then invest in it with the goal of improving that firm’s performance

When the new CEO is from inside the firm and a heterogeneous top management team is in place, the strategy may not change, but innovation is likely to continue

For 15 years, Edward was a compensation specialist at a mid-sized firm. He was laid off when the firm experienced financial setbacks. Edward has decided to open his own business as a compensation consultant to small firms. He can expect that his main source of human capital will be a bank line of credit

Agency costs include incentive costs, monitoring costs, enforcement costs, and individual financial losses incurred by principals