McKelvey

=Abstract=

When share prices fall, CEOs often lose their jobs. The best way to keep share prices high is to produce economic rents-defined as profits above the industry average (Besanko, Dranove and Shanley 1996). Traditionally corporate strategy theorists advised CEOs in terms of economists' theory of the firm- CEOs invest capital and then order labor, as muscle, to carry out those tasks that cannot be turned over to machines- and aimed firms at the low cost or high differentation parts of the efficiency curve (Porter 1985). Now, hitting the efficiency curve is not seen as a gurantee of sustained rents; these come from staying ahead of the curve (Hamel and Prahalad 1994, Porter 1996). to accomplish this, CEOs are advised to add human capital (Becker 1975) and social capital (Burt 1992) to the production function.