THE IMPACT OF FOUNDER CEOS ON FIRM GROWTH: An Analysis Through the Lens of Penrosean and Upper Echelons Theories

Abstract

[DBA Thesis] This research investigates the impact of founder CEOs (FCEOs) on the firms they establish, with a particular focus on firm growth, profitability and productivity (as a robustness outcome). Drawing on Penrose’s The Theory of the Growth of the Firm (1959), Upper Echelons Theory (Hambrick and Mason 1984; Hambrick, 2007) and the Resource-Based View (Barney, 1991), the study examines founder motivations and how CEO attributes shape performance. Using a thirty-year longitudinal dataset of UKincorporated firms listed on the Main Market of the London Stock Exchange as at 31 December 2018,
the analysis employs firm fixed-effects panel models, with propensity-score matching as a complementary check, to compare FCEOs with non-founder CEOs (NFCEOs).

The findings indicate a founder growth premium whereby FCEO leadership is associated with higher growth particularly in younger and smaller firms. By contrast, there is no contemporaneous founder premium in respect of profitability, and productivity shows no systematic founder differential. Generic CEO markers such as highest degree, broad functional knowledge and industry experience,
display weak average associations with growth and profitability once firm heterogeneity is absorbed, and founder interactions on these markers are not robust. In-firm time (the share of a CEO’s career spent within the focal firm) dampens the founder–growth association, whereas tenure in the CEO role shows no systematic link with growth and only a weak average association with profitability. The matched comparison corroborates the fixed-effects results by preserving the growth premium without a profitability premium.

The study contributes a long-horizon assessment of founder leadership grounded in Penrosean growth logic and contextualised by Upper Echelons Theory and the Resource-Based View. Practically, it argues for sequencing (managing founder leadership as a growth mechanism with a planned transition to capability consolidation) and for governance and selection practices that emphasise complementarity with firm-specific architectures rather than portable credentials. These insights inform theory and practice on when and how founders create value.

Date of Award	Mar 2025
Original language	English
Awarding Institution	Aston University
Supervisor	Tomasz Mickiewicz (Supervisor), Jun Du (Supervisor) & Susan Schwarz (Supervisor)