The fast-track ascent to the top: The role of human capital in European listed firms

Abstract

Drawing on human capital theory, this study examines the role of different components of human capital—education (level and type), tenure, and career variety (functional, industry, firm, and country variety)—in the rapid or “fast-track” career ascent of individuals to their first top management position (highest level of organisational hierarchy) as chief executive officer (CEO) or non-CEO Senior Manager (SM). Using a retrospective approach to the career trajectories of over 7500 CEOs and non-CEO SMs s in European listed firms, we show the commonalities and differences in the composition of human capital in the career progressions of both groups. The results reveal that the human capital that accelerates CEOs’ careers include an MBA degree and long tenure, especially when combined with firm variety. In contrast, for non-CEO SMs, a high level of education and low functional variety accelerated their career ascent. For non-CEO SMs, tenure has a negative effect that is alleviated by career variety. By explicating the components of human capital, we suggest that many forms of career variety, such as experience acquired across countries, industries, or firms, are not valued in a fast-track career, and hardly create valuable human capital for top positions. Our study paves the way for exploring the composition of human capital not only for different organisational roles, but also for different hierarchical levels.