Growth Oriented Digital Strategy and Long-Term Compensation of Chief Executives

Presenter Information

Mariana Giovanna Andrade Rojas, Nanyang Business SchoolFollow
Jiban Khuntia, University of Colorado DenverFollow
Terence Joseph Vinay Saldanha, Washington State UniversityFollow
Abhishek Kathuria, The University of Hong KongFollow
Mayuram S. Krishnan, Ross School of Business, University of MichiganFollow

Start Date

11-12-2016 12:00 AM

Description

With C-level executives increasingly involved in shaping digital strategies, it is important for firms to incentivize Chief Executive Officers (CEO) towards growth-oriented digital strategies. However, scant research examines how to incentivize CEOs in developing digital strategies. We propose that a key lever for incentivizing a growth-oriented digital strategy is CEO's long-term compensation. Analyzing longitudinal data of 192 U.S. firms from 2004 to 2011 collected from secondary sources, we find that CEO long-term compensation is positively related to growth-oriented IT portfolio. In contrast, CEO long-term compensation is negatively related to enterprise-oriented and functional-oriented IT portfolios. Further, CEO experience mitigates the relationship between CEO long-term compensation and growth-oriented IT portfolio. Exploratory analyses suggest that product volatility mitigates CEO long-term compensation's effect on enterprise-oriented IT portfolio. And demand volatility mitigates CEO long-term compensation's effect on enterprise-oriented IT portfolio. Theoretical and practical contributions include highlighting of role of CEO long-term compensation in digital strategy.

Recommended Citation

Andrade Rojas, Mariana Giovanna; Khuntia, Jiban; Saldanha, Terence Joseph Vinay; Kathuria, Abhishek; and Krishnan, Mayuram S., "Growth Oriented Digital Strategy and Long-Term Compensation of Chief Executives" (2016). ICIS 2016 Proceedings. 10.
https://aisel.aisnet.org/icis2016/GeneralIS/Presentations/10